Does Australia need more new housing supply? blog image

Does Australia need more new housing supply?

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The number of unoccupied houses in Australia continues to increase and the 2016 Census shows that 11.2% or around one million of our dwellings were empty at this time last year.

The report identified about nine million private dwellings, of which about 8.2 million were occupied and 1 million were unoccupied. Does Australia need more new housing supply?

The reports show an increase of about 630,000 private dwellings since 2011 and an increase of about 105,000 unoccupied homes since 2011, accounting for about 17% of unoccupied new homes from 2011 to 2016.

The highest vacancy rates are usually found in resource-based regions and coastal areas where occupation during winter is often not fun. Notably, the census is conducted early in August every year.

Vacancy in capital cities is also increasing, particularly those with medium density housing and high-rise apartments.

According to the report, a dwelling is often vacant because 50% of owners are absent, 20% of owners are in holiday accommodations, 20% of the homes are for sale or rent and 10% are undergoing repairs or alterations.

This could mean that the dwellings were unoccupied intentionally.

The government has expressed its plans to tax unoccupied properties. The Vacant Residential Property Tax of the Victorian government will be in effect starting 2018 and it will impose a levy on homes which are unoccupied for over six months in a year.

Note that the federal tax only applies to foreign owners, charging vacant properties (for over six months) a fee of $5,000.

It appears that housing has become a financial vehicle and the country still has plenty of spare housing.

The development industry believes that increasing new housing supply will help with our housing affordability crisis but most new houses are disproportionately in mid-to-high priced segments, which do not really cater to first home buyers.

It may be time for the government to re-think their strategies.

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