The property hoarding bug has hit Australian cities with reports that as many as 25 per cent of apartments in Melbourne’s Docklands are permanently unoccupied.
Earlier this month it was claimed that almost 500 apartments in Melbourne’s Docklands consumed no water last year while another 290 used less than 50 litres of water a day – the equivalent of a leaky tap – leading to assumptions that they were empty or rarely used.
Tax-reform group Prosper Australia, which commissioned the Speculative Vacancies study, claims figures across the Victorian capital point to a rental vacancy rate of more than 7 per cent rather than the official figure of just over 3 percent because these homes are not listed as being available for rent.
The “buy and leave” syndrome, where investors would rather leave new apartments empty than rent them out – either with a view to future occupancy of a pristine unit or to accrue capital gain – has affected many world cities including London and Hong Kong.
Regulations came into force in Victoria just last month allowing owners corporations (bodies corporate) to pursue overseas bad strata debts through the state’s Civil Administration Tribunal, rather than the Supreme Court, as previously.
Rob Beck, general manager of the Victorian branch of Strata Community Australia, the industry body for Australian strata managers, told Domain that despite estimates of 85 per cent investor ownership in inner Melbourne, plus the evidence of property hoarding, the financial position for most buildings was getting better.
“As far as l’m aware, there’s been no direct affect [of buy and leave] on the finances of buildings,” he says. “The national average of levies in arrears greater than 30 days is actually improving and is now at 4.87 per cent, compared to about 7 per cent previously.”
“With new buildings – and overseas investors are only allowed to buy new property – as soon as we take over management we hassle the lawyers and conveyancers for the owners’ real contact addresses,” he says. “If you leave it until a problem arises, the lawyers have closed their files and you can’t find the people who owe you money.”
Not everyone is convinced that the water-based research points to a flood of empty apartments. Property and business researcher Savills’ national head of research Tony Crabb says a more likely explanation for the empty homes was travelling retirees and home buyers that were not yet ready to move in.
But with off-the-plan apartments being aggressively marketed in Singapore, Hong Kong and mainland China, property hoarding could become an issue for individual buildings.
Some of these foreign buyers may not consider it worthwhile to rent out their Melbourne properties, Crabb told Fairfax Media earlier: “Sometimes it might be more trouble than it’s worth.”
Concern in the community is growing with 32,000 people signing a petition for tighter rules on foreign ownership of Australian property, amid predictions of a 15 to 20 per cent increase in the coming year.
The change.org petition was launched by Simon Hosking who says he is “not suggesting no foreign investment, but a … toughening of regulations by the Foreign Investment Review Board”.
With concern also growing about ‘land banking’ – developers buying prime redevelopment land but not building on it until economic conditions are more favourable – and a less developer-friendly government a distinct possibility, legislative moves against Australian property’s new squatocracy may be closer than we think.