During the 1980s, the reasons why a dwelling was unoccupied was collected as part of the Census. As shown in Table 2 the two main reasons for a dwelling being unoccupied were that it was a Holiday home or the Residents were absent on Census night. These two categories accounted for 60 to 65 per cent of unoccupied properties.

This data has not been collected since 1986, so a set of assumptions and other data sources were applied to develop a similar breakdown for 2016. These assumptions and data sources are listed at the end of this article, and the results are shown in Table 3. The two largest categories remain holiday homes or residents absent, accounting for more than two-thirds of all unoccupied dwellings. The share of holiday homes is lower than the estimates from the 1980s, which makes sense giving falling homeownership rates. Absent residents were higher which given the increased mobility of households makes sense.

While this analysis has limitations, it suggests that most of the dwellings that were unoccupied on Census night were unoccupied for a very valid reason. There does not appear to be a large pool of dwellings being withheld from the housing market.

Here’s the list of reasons why homes were empty in 2016:

This is further confirmed by spatial analysis of the number of unoccupied dwellings. Areas with the highest demand for housing tend to have the lowest level of unoccupied dwellings, primarily capital cities, while regional areas have higher rates of unoccupied dwellings.

Where are the Unoccupied Dwellings?

Shown in Table 4, the share of unoccupied dwellings is higher in regional areas compared to the capital cities. Sydney’s rate of 7.3 per cent is the lowest in the country, while Regional South Australia is the highest (22.0 per cent). This aligns with Sydney’s highly competitive property market and low levels of demand in regional South Australia.

Figure 1 (below) presents the percentage of unoccupied dwellings for each Statistical Area 4 (SA4) in Australia. The SA4 with the highest share of unoccupied dwellings is the South East SA4 in Tasmania at over 30 per cent, followed by the South East SA4 in South Australia, Mornington Peninsula, Latrobe - Gippsland and the Barossa - Yorke - Mid North, all of which have around 22 per cent of dwellings being unoccupied.

The spatial distribution of high rates of unoccupied dwellings suggests that it can be linked to two distinct characteristics. The first is that the area is a popular holiday destination (such as Mornington Peninsula, Barossa - Yorke - Mid North, and Southern Highlands- Shoalhaven) and is likely to have particularly high proportions of Holiday homes and Short and long term rentals.

The second is that the area (such as Latrobe – Gippsland) has suffered a loss or significant decline of major industries (for example mining or energy production) which has led to declining populations. These areas would have higher than average numbers of unoccupied dwellings that are either for sale or have absent residents.

Four of the top five SA4s with the lowest rate of unoccupied dwellings are in the rapidly growing areas of Sydney, with the fifth SA4 being Moreton Bay – South of Brisbane. With high levels of demand in these locations, vacancy rates for rental properties will be lower, and because properties are on the market for a shorter time there will be less unoccupied dwellings. These areas would also have fewer holiday homes and rentals, and these are less likely to be unoccupied due to the competitive nature of the property market.