There Are Thousands Of Vacant Homes In Prime Sydney Suburbs, Because Tax Incentives
You know how it’s exceptionally difficult for people (bar the already wealthy) to own property? Especially in Sydney? An analysis by the UNSW’s City Futures Research Centre has found that there are 90,000 vacant properties lying unused in some of Sydney’s prime areas.
The analysis claims that this exceptional number of vacant properties is just one of the “perverse outcomes” created by tax incentives that cause owners to opt for capital growth over rental returns. And these vacant properties are artificially inflating Australia’s housing affordability crisis.
Simply put: “Leaving housing empty is both profitable and subsidised by government,” researchers Bill Randolph and Laurence Troy told the Sydney Morning Herald. “This is taxation lunacy and a national scandal.”
The research compared the number of ghost homes in a suburb against the rate of returns investors gained from rent. So when a rental yield is low but the capital gains were expected to be higher, owners were clearly choosing to leave the properties empty because there would actually be a larger increase in value that way.
Why? Any losses would be offset by tax incentives such as negative gearing and capital gains concessions. Makes total sense.
So where are the hot spots for property vacancy?
According to the 2011 census, in some of Sydney’s most sought-after suburbs, of course!
#1 Sydney’s “emptiest” neighbourhood is the CBD, Haymarket and The Rocks: one in seven dwellings was vacant.
#2 Manly – Fairlight
#3 Potts Point – Woolloomooloo
#5 Neutral Bay – Kirribilli
Areas #2 through #5 all had vacancy levels above 13%. All of these suburbs, including the CBD area, account for nearly 7200 empty homes.
The fact this is happening at a time when homelessness is a national crisis in Australia – more than 100,000 people in Australia are homeless at any given time – and funding has been cut to the very organisations and housing programs that help support those in need, these 90,000 vacant homes stand as stark reminders of a blatant inequality and need to address current policy.