New ABS data reveals Aussie capital city with most empty homes

Empty homes are often blamed for the deepening property crisis but new ABS data sheds light on what’s really happening.

Empty homes in Sydney by electricity use.

ANALYSIS

Housing in Australia is among the most expensive in the world. You can get a home in London or New York for a similar price to what we pay for a house in the suburbs of our capital cities.

Australians are getting older and older when they buy their first home, as the challenge of saving up gets harder and harder. And yet, the country has empty homes. Their location is revealed now thanks to brand new data from the Australian Bureau of Statistics, and it shows that many of those empty homes are in prime locations.

The next map shows Sydney, and it reveals a huge cache of empty homes on the north shore of the harbour. The area of North Sydney is riddled with empty homes, according to ABS data on electricity use. It shows 900 empty homes in an area of 32,400 homes, according to electricity use measured in mid-2021.

The data covers a one-month period for smart meters and a 3.5 month period for basic meters. Not all dwellings could be matched to electricity data, so there will be some errors.

Of course, some addresses could be under construction; in others nobody is living there while there is legal wrangling over a will. Some maybe got condemned and aren’t fit for habitation, etc, etc. Not every “empty” home is a beautiful functional home ready for someone to move into.

I’m fairly suspicious of the narrative that Chinese investors are buying up flats and leaving them empty. It is possible, I’m sure it happens sometimes. But I don’t think it’s common because it’s a terrible investment: flats get pretty good rents and pretty bad capital appreciation. Meanwhile renting them out isn’t hard: a real estate agent takes care of that for you. Empty homes are a real phenomenon, but you don’t need to conjure up inscrutable Chinese landlords to explain it. In fact, Chinese tenants is a more plausible theory.

Some of these homes that were empty in 2021 when the measurement was done could be ones whose tenants fled back home during Covid. We know that rental vacancies went up in 2021, especially in the inner city. So a partial explanation for the empty homes would be local landlords who would usually lease to foreign tenants.

Here’s the same map for Melbourne: you can see that it also has a high level of empty homes in the inner city; in fact even higher than Sydney (nb. check the scale, Melbourne tops out at 4 per cent not 2.5 per cent). That fits with the theory that tenants fled: there was more reason to flee Melbourne in 2021 than anywhere else!

Here’s the rest of the capitals,

And a map of the whole of Australia.

Where does this leave us? Basically it tells me that empty homes are not the cause of the housing crisis. They’re a minor phenomenon. At most they account for 4 per cent of homes in some suburbs in a crisis period. It’s something but it’s not a whole lot.

But is that the end of the story?

The data gives us something else to look at: non-primary residences. These are homes that nobody has listed as their address. They aren’t listed as someone’s primary residence. They might be holiday homes or airbnbs or pieds-a-terre (fancy French term for having a flat in the city when you live somewhere else).

These kind of homes are far more common. As the next chart shows, the level of non-primary residences is far higher in Sydney than the number of homes assessed as being vacant.

It’s a similar story in much of the other capitals – here’s Melbourne.

You can see the high rate of non-primary residences in the city (I imagine these as airbnbs) on the peninsulas to the south (I think of these as holiday homes).

While holiday homes aren’t useful as homes for most people who want to live in the city, the number of non-primary residence in the city suggests we could afford to build a lot more hotels, serviced apartments and inner city residences to meet the need for temporary accommodation there.

Jason Murphy is an economist | @jasemurphy. He is the author of the book Incentivology.