On Census night 2016 there were over one million dwellings unoccupied in Australia (or 11.2 per cent). But absentee landholders, sitting on properties and waiting to make a capital gain, aren’t to blame for the unoccupied residences, according to the latest analysis of the census.
There does not appear to be a large pool of dwellings being withheld from the housing market. The reasons are many. The home may have been newly constructed but not yet occupied. It may have still been for sale or under offer. Or the dwelling was a deceased estate. It may also have been a short term or long term rental property or a holiday home or was unoccupied due to the residents being away on holiday.
The 11.2 per cent of unoccupied dwellings in 2016 is only 0.5 percentage points higher than the 2011 census. Unoccupied dwellings have consistently made up around 10% of dwellings in Australia in the past 35 years.
Table 1: Dwellings by type
|Year||Unoccupied private dwellings||Total private dwellings||Percent of unoccupied dwellings|
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.
Table 2: Share of unoccupied dwellings by reason
|Rental (short and long term)||10.6%||11.3%|
|Repairs or alterations||4.7%||4.4%|
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:
Table 3: 2016 Share of unoccupied dwellings by category
|Category||Unoccupied private dwellings||Share of unoccupied dwellings|
|Rental (short and long term)||110,000||10.6%|
|Repairs or alterations||47,000||4.5%|
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.
Table 4: Unoccupied private dwellings by region
|Region||Unoccupied private dwellings||Share of total private dwellings|
|Regional South Australia||44,829||22.0%|
|Regional Western Australia||47,137||18.6%|
|Regional Northern Territory||5,184||15.0%|
|Australian Capital Territory||12,590||7.7%|
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.
Figure 1: Percent of unoccupied dwellings - Australia
Figures 2 and 3 present the SA4s for Sydney and Melbourne. Melbourne Inner has a higher percentage of unoccupied dwellings (possibly due to the large supply of new apartments that were newly completed around August 2016) and Mornington Peninsula has much higher levels of unoccupied dwellings due to the presence of many holiday homes and short term rentals.
Figure 2: Percent of unoccupied dwellings - Melbourne
Figure 3 shows a more consistent picture across Sydney, although the SA4s containing the north west and south west growth areas tend to have slightly lower rates of unoccupied dwellings, and this is where there are particularly high rates of population growth.
Figure 3: Percent of unoccupied dwellings - Sydney
While there were over one million dwellings unoccupied on Census night, there does not appear to be a large pool of dwellings being withheld from the housing market. It appears that most dwellings that were unoccupied on Census night were unoccupied for a very valid reason. The two largest categories of unoccupied dwelling are Holiday homes or the Residents absent, which accounts for two-thirds of all unoccupied dwellings. Dwellings are more likely to be unoccupied in regional areas than in capital cities. This is the result of lower demand rather than housing being intentionally withheld from the housing market.
2016 Unoccupied Dwellings Estimation Assumptions
Using a set of assumptions and other data sources, a breakdown of different categories of unoccupied dwellings was developed for 2016. These assumptions and data sources are listed below.
- For Sale: Given roughly 5 per cent of properties are for sale, it has been assumed that 5 per cent of unoccupied dwellings will also be for sale.
- Rental (short and long term): The rental properties was estimated to be 110,000 based on an assessment of rental properties (both available via private agencies and Airbnb).
- Newly completed: From Building Activity Australia (ABS Cat. No. 8752.0), the average number of dwellings completed in the June - September quarters of 2016 was 55,000.
- Repairs and alterations/awaiting demolition: Based on the average percentage from the 1981 and 1986 Census data.
- Holiday homes: The 1986 Census number of holiday homes was used as a starting point, and the overall dwelling growth rate was applied to produce the 2016 estimate.
- Resident absent: Based on the number of people collected in the Census as not being at their usual address. The average number of people resident (1.8) in Lone person and Couple Only households was then used to convert the number of people into households. (The assumption here being that families would be less likely to be travelling on Census night). This was then increased by 10 per cent to account for people who were travelling internationally on Census night.
- Other: The residual number of unoccupied dwellings were then assigned to the Other category.