Experts say that Sydney is in the middle of a housing affordability crisis, with high demand and low inventory pushing up house prices. Now recent reports reveal that the affordability issue might be artificially inflated as thousands of homes are sitting empty in the city's suburbs.
According to The Sydney Morning Herald, there are 90,000 homes in Sydney that are vacant, with the CBD, Haymarket and The Rocks having the most number of empty properties. Experts say this is one of the impact of the government's support on negative gearing. The measure encouraged property investors to acquire properties and let them gain value instead of putting them for rent.
The analysis conducted by the UNSW's City Futures Research Centre said that the government just made it profitable for investors to leave their house empty. It even subsidizes the practice through tax incentives, such as capital gains concessions, which offset the losses incurred by the owners from their vacant properties.
"If you choose to accept that there is a housing shortage in Sydney, then the sheer scale and location of these figures strongly suggest that this is an artificially produced scarcity," researchers Bill Randolph and Laurence Troy said.
Earlier this month, as reported by ABC, a report on housing affordability crisis in Sydney, as well as in Melbourne, said that the Federal Government's support on negative gearing is driving housing prices to record heights. The "Sydney and Melbourne's Housing Affordability Crisis - No End in Sight" report that was written by Dr. Bob Birrell and David McCloskey from Monash University's Centre for Population and Urban Research urged the government to rethink its measures, highlighting how serious the problem is.
"The result has been an enormous increase in investment but it has been primarily in established houses and that has caused these prices to reach levels in Sydney that are among the highest in the western world," Dr. Birrell said, per ABC.