The housing demand has been increasing in the past few months in Melbourne, Australia. However, the vacancy rate among these investor-owned properties have been increasing, too, for some reasons.
According to the 2015 Speculative Vacancies Report as reported by News.com.au, one in every five investor-owned properties are unoccupied. The report analyzed data using the water consumption of the households in Melbourne. It has classed those properties regarding their consumption of water, especially those with abnormally-low amount as vacant.
Karl Fitzgerald, Prosper Australia project director sees that there is an oversupply of unused housing. Moreover, owners seemed to not bother rent their properties. Instead, they leave them be without occupancy.
Although in 2014, the number of vacancies also jumped after the property market boomed. In the 2015 article of News.com.au, the vacancy rate for Melbourne is 2.3%. As vacancy rate increases, asking rents could also drop or stall.
“The number of properties that are vacant doesn’t surprise me, but the main problem there is for the owner and investor, because while it’s vacant they’re not getting a return, and if they’re holding out for capital growth you only get that once, or for negative gearing, that’s only once a year,” Queensland University of Technology property economics professor Chris Eves said.
“ If they don’t have the rental income, that puts a lot of stress on the owner. The frustrating thing for the market is that any vacant housing can skew the supply and demand,” he added.
It is also reported that wealthy Chinese businessmen have been buying luxury mansions and and have been leaving them empty which led to some suburbs turn into ghost towns.
What do you think of the increasing vacancy rates in Melbourne? Do you think that asking rent could also drop alongside this report? How about the wealthy Chinese businessmen leaving their properties behind with no occupancy?
