Innovative Vacant Housing measure - Speculative Vacancies 2013
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Transcript of Innovative Vacant Housing measure - Speculative Vacancies 2013
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!Why is it important? !! Affordability crisis ! “Housing Shortage” ! Dilapidated houses (over-flowing mailboxes, un-kept lawns. Rusted industrial sites vacant shops, vandalism..)
! Land unemployment rate
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How do you tell if a property is vacant? !! Published Vacancy Rates (REIV, SQM Research) ! Census Data ! Neighbourhood Watch and Community-Planning Groups ! Analysis of Electricity Use (Paris) ! Council Data (UK)
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!! Is there a way to measure the rate of, and number of long-term vacant residential and commercial properties in Melbourne? !
! Follows on from Speculative Vacancy reports from previous years. !
! Now into the 7th year.
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!! Conservatively low water consumption is a proxy measure to
identify un-derutilised residential and commercial property stock.
!! Data is un-fragmented and nearly complete – metropolitan
households cannot change their water retailer as they enjoy a monopoly status.
!! For the 2nd year, data is sourced from all three retailers: City
West Water, South East Water & Yarra Valley Water. !
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!! Data provided 1,475,771 residential properties in 393 suburbs. !! 94.4% of total residential dwellings in the greater metropolitan area. !! Also covers 126,529 commercial properties across 399 of Melbourne’s suburbs.
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!! Conservative measure of 50 litres per day (LpD) per property used. (Shower – 12-15 litres per minute. Single flush of toilet – 12 litres.) !
! Per capita consumption was 161LpD in 2012/13. Average daily usage for a two-person household 320LpD. Average daily use for a sole person 157LpD (2013.) !
! Only 3% of households use less than 50LpD.
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!! Vacant properties with leaks ◦ Slowly dripping tap: 20-50LpD ◦ Fast dripping tap: 230LpD ◦ Full flow (tap on full): 28,800LpD !
! Apartment/unit blocks serviced with single water meter. (All newly constructed buildings are now required to install individual water meters)
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! Untenanted investment properties for sale. !
! Demolished properties waiting for approval/renovation. !
! Long period between old and new tenants. !
! Serviced apartments (same reason as above). !
! Water Tanks
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! Escalating capital values outweigh net rental income, providing an incentive for vacant properties
! The tax systems encourages investors to speculate – state land tax is low, capital gains are taxed at a discounted rate, and land price escalation is rapid.
! May be easier to let properties remain vacant (Landlord Costs).
! Cost of Renovation/Diseased Estates etc. ! Foreign Ownership
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• UNITS - More than 7 in 10 investors - inner city suburbs (Kingsville, Docklands, Carlton, and North Melbourne) !
• HOUSES – More than 3 in every 10 properties on the western fringes of the state. (Point Cook, Tarneit and Truganina at 41.9%, 40.9% and 39.8% respectively !!!
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!! Typical investor budget = $450,000-$650,000. ! State Land Tax (SLT), with a zero rate levied below an assessed value of $250,000.
! $450,000 = $675 per/yr SLT + $900 per/yr council rates. !
$1600 total – vs - $30,000 ‘capital gains’
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Owners Selling their homes in the June quarter of 2014 after an average hold period of around 10 years !•Boorondara - $519,000 •Whitehorse - $380,000 •Melton - $95,250 •Wyndham - $91,000 !Gains Over Sep Qtr 2014 !•Balwyn = 16.3% •Thornbury = 16.7% •Mount Waverley = 12.5% !
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! Fewer Australians owning their homes outright (41-31% 1996/2011) ! A rising percentage of long-term tenants renting for a period of 10
years or more (1/3 tenants “long term” 10yrs or more). ! A decrease in the number of low income buyers obtaining ownership,
particularly families with children (49% to 33% - 1982/2008). ! A drop in the number of affordable rental dwellings with a marked
increase in the number of households in rental stress. (Over 60% of lower-income rental households in Aus in rental stress)
! Greater requirements for public housing. (28% increased demand projected by 2023).
! A rise in homeless percentages and those who drift in and out of secure rental accommodation – with ongoing intergenerational effects. (1996-2011 8% = 89,728 to 105,237)
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! There were 14,659 residential properties with no water usage throughout 2013 (1%), while 64,386 (4.4%) used no more than 50LpD.
! Melbourne’s official vacancy rate is 2.5 per cent (SQM Research) If combined with number of SVs it more than doubles to 6.9 per cent.
! 105,520 transacted residential over the course of 2013 and 92,709 in 2012.
! Only marginally more than the total number of potential residential and commercial SVs at 93,743. !A figure almost equal to year’s supply of housing turnover lays
dormant during a housing supply crisis.
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!! Dataset and methodology not publicly available. !
! Analysis done in-house, no oversight. !
! Not audited by independent third party. !
! REIV ultimately represents agents, not vendors, buyers or public in general.
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! There were 6,207 commercial (non-residential) properties with no water usage throughout 2013 (4.9%), while 29,357 (23.2%) used
no more than 50LpD. !! In addition to speculation, large retail chains land-bank to prevent
competitors increasing market share. !! Unused commercial sites also stem from demolition, renovation,
industrial zoning constraints, and weak tenant demand.
Commercial/Industrial Vacancies
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!! The State government has gifted landowners with reduced land tax
liabilities – the marginal tax rate is only 2.25% for properties valued at $3million+.
!! This encourages land and dwellings to be withheld, raising the SV
rate. !
! There is a direct link between the housing affordability crisis for renters/homebuyers and tax expenditures, concessions and exemptions.
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!! #1: An improved State Land Tax (SLT) is levied on a low flat-
rate, no-threshold basis, replacing the current progressive land tax schedule.
!! #2: Transfer taxes such as conveyancing stamp duties are
replaced with a comprehensive SLT. !! #3: New estate infrastructure is financed by a bond system –
costs are recouped from residents over an extended period, not folded into up-front housing prices.
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!! #1: Governments must perform extensive analysis of the
property market to determine reasons for vacancy. !
! #2 Enhanced SLT - a low flat-rate no threshold SLT should replace the progressive land tax scale
! #3: ABS takes lead in analysis and reporting of rental vacancy rates (and all property data), not REIV/A or RE firms.
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!! Many properties potentially and demonstrably vacant that could be placed on the rental market. !
! High vacancy rate for commercial property. !
! Property underutilisation or vacancy akin to labour unemployment, generates inefficiencies. !
! No apparent shortage of houses.
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