By Josh Gordon and Rachael Dexter
Almost 100,000 homes in Melbourne – enough to cover the social housing waiting list twice over – are unoccupied, prompting calls for a major tax overhaul to discourage the waste.
A new study, based on a fine-grained analysis of residential water usage across 200 postcodes, has found one in 20 Melbourne homes (including houses and apartments) are not being lived in. That includes 27,408 empty dwellings and 70,453 that are barely used.
Victoria has been struggling through a housing crisis as rents and house prices have jumped while social housing waiting lists have soared. Former premier Daniel Andrews used his last weeks in power to announce his government planned to build 80,000 homes a year to keep up with the pace of Melbourne’s population growth.
But this new data shows part of the solution may already be at hand. The biggest increase in empty dwellings was in the City of Melbourne. The study estimated 10,000 homes there are vacant – equivalent to half the total new builds in the local government area over the past five years.
Melbourne’s empty homes are dispersed across the city. In the suburb of Brunswick East, 12.7 per cent of dwellings were vacant, the highest rate in Melbourne. Of 8020 total dwellings there, 1015 were vacant. The next highest vacancy rates were the CBD (12.4 per cent), South Melbourne (12.1 per cent) and Abbotsford (11.2 per cent).
The report, by independent economic think-tank Prosper Australia, concludes 5.2 per cent of Melbourne’s total housing stock was sitting idle last year, up from 3.9 per cent in 2019, just before the pandemic triggered a mass exodus from the state.
Jordan van den Berg outside unoccupied homes in Brunswick.Credit: Justin McManus
Unlike other Australian capitals, all residential dwellings in Melbourne have individual water meters, making it possible to map usage across 1.9 million dwellings over 200 postcodes.
The dataset removes 33 postcodes with high numbers of holiday homes. Under-used homes were deemed to use less than 50 litres of water per day on average over a year, enough to cover a small amount for gardening or leaks. The daily average water usage for a single-person household is 200 litres per day.
In Box Hill, Houston and Wattle Park, 11.1 per cent of properties were vacant, while in Burwood, Bennettswood and Surrey Hills South, 11 per cent were empty.
The report said the rise in the number of vacant homes highlighted the extent to which Victoria’s housing supply is at the mercy of speculative incentives, including a federal tax system favouring capital gains over rental income.
“It’s not surprising that many investors prefer the flexibility of an empty property,” said Prosper Australia director of research and policy Dr Tim Helm.
The report also blamed developers for dripping out land for housing to maximise profits when prices are highest, a practice known as “land banking”.
The report states the number of empty homes could theoretically house 250,000 people based on average household size. For comparison, there are 48,620 applicant households on the Victorian social housing waitlist, and Prosper says if all vacant homes were put out for rent, Melbourne’s rental stock would be almost 20 per cent larger.
The wastage of empty homes has been pushed into the public sphere this year by Melbourne-based tenant advocate Jordan van den Berg – known by his online handle @purplepingers – who controversially publishes the addresses of empty houses online for people to squat in them.
Van den Berg said he wasn’t surprised by the report as it “lined up” with the addresses he had crowdsourced, including at least 33 empty houses in the Brunswick area that he said were predominantly “rotting” standalone workers cottages.
He said he only published the addresses of homes that were not for sale or lease and did not have an active planning permit. He has received death threats for doing so, but is unapologetic.
“I think it’s ridiculous that we have homes without people while we have people without homes – especially in a cost-of-living crisis,” he said.
The state government has charged a vacant residential land tax since 2018 to homes in inner and middle-ring suburbs left vacant for six months of the year. From 2025, it will apply across Victoria, with the rate – 1 per cent of capital improved value of the land – to start ratcheting up by 1 percentage point for each year a property is vacant.
From 2026, it will also apply to residential-zoned land in metropolitan Melbourne that has remained undeveloped for at least five years as part of a push to encourage the faster development of land. The state government is also seeking tip-offs for vacant properties.
A Victorian government spokesman said it was cracking down on vacant properties.
He said the government was “trialling an enhanced compliance effort” this year – auditing every dwelling in the inner and middle suburbs of Melbourne, rather than relying on voluntary reporting by owners.
Helm said while this approach would discourage people from leaving properties vacant and land undeveloped, a better approach would be to tax all land equally and encourage it to be used most productively, including by hastening development and lowering taxes on construction.
“The vacancy tax is welcome, but if we want a durable solution to speculation we have to take seriously the idea of shifting more taxation onto land using broad-based land taxes and value uplift capture,” Helm said.
Prosper Australia’s report also argued councils should base their rates on the value of the land rather than the property. It also backed the idea of replacing stamp duty, which has also been blamed for exacerbating the housing affordability crisis.
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