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Vacant dwellings and Australia's never-ending property bubble
Topic Started: 22 Nov 2013, 12:36 PM (3,502 Views)
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Empty homes and the never ending housing bubble

By Karl Fitzgerald - posted Thursday, 21 November 2013

The beauty of the disinformation is staggering. As house prices accelerate 7.6% nationally, poor housing supply continues to be blamed for the housing crisis. Meanwhile, the sixth Speculative Vacancies report found over 64,000 empty homes in Melbourne.

Consider for a second the national headlines if we had an 8% unemployment rate or lo-and-behold a 4% inflation rate. There would be widespread concern. But here we have a never ending housing bubble, and a 4.4% vacancy rate. This is enough housing for at least 160,000 people. Inefficiently used. Wasted. Its akin to the unemployment rate for our most crucial resource.

The locked out generations have endured 14 years of housing frustration since John Howard halved the capital gains tax rate and ushered in housing investment as a national past time. There seems to be no answer in sight. First Home Buyers have withered to 6.8% of all housing loans in Sydney. Yet the media game is to blame the removal of the sellers' subsidy, the First Home Vendors grant. Little is said of the high price of land. Little is mentioned of the flat earth economics used to justify foreign investment. No matter how much money you invest, you can't create more land. It's bound to push prices up.

We all walk past dilapidated houses with over-flowing mailboxes and unkept lawns. Rusted industrial site.s The perennial vacant shop plastered with rock posters. We have conditioned ourselves to ignore these wasted sites as an inevitable part of city living. But with housing supply such a prominent issue, perhaps it is time to look more closely at how many vacant homes there are before we sprawl any further.

The report defines vacant properties as using less than 50 litres of water a day on average over 12 months. Single person homes average 177 litres per day. Only 2% of Melbournians have a water tank plumbed into the house.

In June 2012, 12,361 properties were available for lease in Melbourne. The report found 12,691 properties used zero litres of water for a full 12 months. But rents keep rising. What could doubling the amount of rental property do for affordability?

The tragedy for young people is that they now face the prospect of a lifetime of renting. Over $50 billion is given to property investors in tax subsidies each year. Those on Newstart receive barely $6 billion in welfare. Yet Federal Treasurer Joe Hockey talks about the age of entitlements. We ask, is it perfectly natural for those who already own property to receive such significant subsidies?

Our public policy encourages property speculators to hold property off the market, enforcing scarcity. Louis Christopher of SQM Research recently stated a 'staggering 17.6% less property'is on Sydney's booming market than this time last year. The less on offer, the higher prices go.

Concern over vacant housing is rising. Both China and France are using electricity consumption as a proxy for vacancy. The Chinese found a staggering 65.4 million empty apartments in 2010 - a sure sign the global property ponzi game is alive and kicking.
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In the USA last week, the Census Homeownership and Vacancysurveyrevealed a housing vacancy rate of 10.2%. The media enthused at the recent rise in US house prices, but rarely mention it is an investor led recovery, fuelled by the cheap money helicoptered in via quantitative easing.

Typifying this is Blackstone Capital, one of the world's largest property players. Despite the mess made by mortgage backed securities, the company last week launched a new breed of financial wizardry – rental backed securities. Now that so many have had their financial futures blacklisted by buying at the top of the real estate cycle, groups like Blackstone, who have snapped up over 40,000 homes in foreclosure fire sales, will now rent out these properties to (perhaps) those same families. The rental income streams and the mortgages owned by Blackstone will be grouped together and sold in tranches based on credit ratings to bondholders. Rental payments will in turn pay off the bondholders, releasing more capital for Blackstone to snap up properties. A few weeks ago, Blackstone CEO Stephen Schwarzman was in Australia talking up a $2 billion fund to snap up prime locations here.

The UK has a property bubble double the size of Australia's with over 1 million empty homes. The BBC TV show The Great British Property Scandalhighlighted the concern last year. Stories of high London rents see people finding it cheaper to fly from Barcelona and back each day. In Ireland the pre-crisis demands for more land quickly turned into rapid oversupply once land prices started falling. But that didn't stop the bailouts.

The global trend is evident. Easy profits in real estate are luring more entrepreneurs into this lucrative field of tax loopholes and easy profits. They are comforted by the knowledge any meaningful reform resides in the too-hard-basket. 'It's political suicide'.

The recommendations in the Speculative Vacancies report include increasing the holding charges on land with a broad based Land Tax. These revenues could be used to abolish Stamp Duties. This would be a step in the right direction by taxing away 'unearned incomes', providing an incentive for the empty homes and shops in our neighborhoods to be brought onto the market.

Renters are being pushed to test how many rental increases they can handle in the face of thousands of vacant properties. On current projections it will take less time to change the tax system than to pay off a mortgage.

Read more: http://www.onlineopinion.com.au/view.asp?article=15734&page=0
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Foxy
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Zero is coming...

i think Mr. Steve Keen made this point clear in his report.
Peter
From Gnarabup
:pop:
But to be fair rich people can have several homes and holiday homes so it's not rocket science or magic.
They just can not live in more than one at a time.
Supply and demand.
Peter
:pop:
Edited by Foxy, 23 Nov 2013, 08:06 PM.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Sunder
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Never understood this measuring water usage as a means of determining a house's occupancy. There were probably several years where my unit was considered empty. Get up in the morning, wash my face, brush my teeth and shave... 5L? If that. Breakfast, rinse dishes - probably a litre or two. Run or cycle to work, shower there. Cook dinner, another few litres? Washing clothes once a week was done in common property, so unmetered there.

Then there are the times I spent 2-3 days a week living out of a suitcase. Showered at home, but with a water saving head and 5 minute showers, still would have been borderline.

Sure, not everyone lives this way, but 12 thousand in a city of 4 million? Easily conceivable.
Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
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dave
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Sunder
23 Nov 2013, 11:52 PM
Never understood this measuring water usage as a means of determining a house's occupancy. There were probably several years where my unit was considered empty. Get up in the morning, wash my face, brush my teeth and shave... 5L? If that. Breakfast, rinse dishes - probably a litre or two. Run or cycle to work, shower there. Cook dinner, another few litres? Washing clothes once a week was done in common property, so unmetered there.

Then there are the times I spent 2-3 days a week living out of a suitcase. Showered at home, but with a water saving head and 5 minute showers, still would have been borderline.

Sure, not everyone lives this way, but 12 thousand in a city of 4 million? Easily conceivable.
You probably neglected to tick the FHB box when you bought your first property too.
I'm sure theres thousands like you.
(You can pick them out in a crowd, they stink)
Edited by dave, 24 Nov 2013, 12:00 AM.
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themoops
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dave
23 Nov 2013, 11:58 PM
You probably neglected to tick the FHB box when you bought your first property too.
I'm sure theres thousands like you.
(You can pick them out in a crowd, they stink)
If I'm not mistaken he is a pom.

$50bn is given to property investors? I wonder if this is true?
Edited by themoops, 24 Nov 2013, 12:07 AM.
stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
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GloomBoomDoom
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Sunder
23 Nov 2013, 11:52 PM
Never understood this measuring water usage as a means of determining a house's occupancy. There were probably several years where my unit was considered empty. Get up in the morning, wash my face, brush my teeth and shave... 5L? If that. Breakfast, rinse dishes - probably a litre or two. Run or cycle to work, shower there. Cook dinner, another few litres? Washing clothes once a week was done in common property, so unmetered there.

Then there are the times I spent 2-3 days a week living out of a suitcase. Showered at home, but with a water saving head and 5 minute showers, still would have been borderline.

Sure, not everyone lives this way, but 12 thousand in a city of 4 million? Easily conceivable.
You never went to the toilet?

Here is some info I found on standard water use.

http://www.gwmwater.org.au/information/education/water-conservation/water-usage
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dave
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GloomBoomDoom
24 Nov 2013, 12:07 AM
You never went to the toilet?

Start the daily run to work.
Should the need arise, stop half way, dig small hole, shit in hole, bury it, continue run.
Enjoy free hot shower at the office.
Wash poo stained undies in the sink.

Bound to be thousands just like him.
themoops
24 Nov 2013, 12:06 AM
If I'm not mistaken he is a pom. <br /><br />
That'll explain it.
Edited by dave, 24 Nov 2013, 01:17 AM.
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Sunder
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GloomBoomDoom
24 Nov 2013, 12:07 AM
You never went to the toilet?

Here is some info I found on standard water use.

http://www.gwmwater.org.au/information/education/water-conservation/water-usage
Sure, 1 x 6l flush and 2 x 3l flush - maybe 1 or 2 extra on the weekend. Still doesn't add up to much.

Property speculation is a type of gambling... But everyone knows that in gambling, the house always wins in the end.
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peter fraser
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I've seen reports from the USA where they also have 8% to 10% of houses unoccupied for all sorts of reasons such as vacations, renovations, awaiting new owners to move in, unoccupied rental home, holiday home etc.

The water usage data is a measure wrongly read by people who refuse to listen to the market and need some small thing to cling to.
Edited by peter fraser, 24 Nov 2013, 09:28 AM.
Any expressed market opinion is my own and is not to be taken as financial advice
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dave
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peter fraser
24 Nov 2013, 09:28 AM
I've seen reports from the USA where they also have 8% to 10% of houses unoccupied for all sorts of reasons such as vacations, renovations, awaiting new owners to move in, unoccupied rental home, holiday home etc.

The water usage data is a measure wrongly read by people who refuse to listen to the market and need some small thing to cling to.
Water usage data is just another form of data you need to discredit in order to hype the market.

Lets see your american reports that validate empty australian properties.
Sunder
24 Nov 2013, 09:17 AM
Sure, 1 x 6l flush and 2 x 3l flush - maybe 1 or 2 extra on the weekend. Still doesn't add up to much.
It should still add up to more than zero litres.

But please, continue your charade, its getting more amazing with every water saving detail.
Edited by dave, 24 Nov 2013, 11:29 AM.
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