Recent concerns over high vacancy rates as reported in the most recent census are likely much ado about nothing, as a look at history shows.

Recent media articles have headlined that Australian cities have a growing number of empty homes. The focus seems to be on apartments with a belief that investors are happy to buy an apartment and leave it empty. The outrage came from research that showed that 6.9 per cent of Sydney dwellings were unoccupied according to the 2011 Census.

Despite the cries of alarm, Dr Nigel Stapledon, director of real estate research from UNSW, explains that 6.9 per cent is below the normal vacancy rate. He points out that in 1971, the percentage of unoccupied Sydney dwellings was 7.9 per cent.

Back in the 70s, the Census broke down the data on unoccupied homes in greater detail than today. Stapledon found that 11.4 per cent of flats and apartments were vacant across the Sydney metropolitan area, with a higher percentage in the wealthier suburbs of Ku-ring-gai, Mosman and Woollahra. The 1971 data identified the breakdown of reasons for dwellings being vacant on Census night. As a percentage of all dwellings, 1.9 per cent were up for sale or to be let, 0.7 per cent were awaiting occupancy, 0.4 per cent were vacant for repair, 1.7 per cent were holiday homes, 2.3 per cent were temporarily absent (the owners may have been travelling), and 0.9 per cent had no stated reason for vacancy . The temporarily absent numbers went up significantly in the wealthier suburbs, where residents probably travel more frequently or own holiday homes.

The fact that the Census is generally conducted in August supports the travel reason for homes being empty. Europe’s best travel month is August in their mid-summer while in Australia, the Grey nomads like to take their caravans to warmer climates in northern Australia and the skiing fraternity head to our snow.

To better understand what is happening across Australian cities, we asked demographer Dr Alison Taylor to compare vacancies across all capital cities. The average capital city vacancy rate at the time of the 2011 Census was 7.8 per cent with Melbourne having the largest number of unoccupied dwellings. Melbourne had 141,000 vacant dwellings, or 8.6 per cent. Hobart with 9.4 per cent and Perth with 9.1 per cent were higher on percentage terms but not on actual numbers. Sydney had the lowest vacancy rate at 6.9 per cent, followed by Brisbane (7.1 per cent) and Adelaide (7.8 per cent).

The ABS has clear definitions for “Unoccupied Private Dwellings” and this includes holiday homes, huts or cabins, newly completed homes (not yet occupied), homes waiting for demolition or repair, homes to rent or the occupant being away on Census night. So a little digging into the data on vacant dwellings gives some clear understanding of the reasons. It would seem that a vacancy rate of 7.5 to eight per cent is quite normal in Australian cities. Some commentators however have focussed on new apartments as often having higher numbers of empty dwellings.

Apartment living is taking off in Australian cities and part of the attraction is that they are easier to lock up when travelling without a backyard to be protected or maintained. So many baby boomers are down-sizing to an apartment so they can travel more often. Many global business people who must travel frequently find an apartment more comfortable and those with a holiday home outside the city often trade this off with a smaller urban apartment.

So in the contemporary cities in Australia, we will need to get used to vacant dwellings getting up to 10 per cent over time as occupiers develop more fluid lifestyles through travel to holiday homes, within Australia or to the world. There will still be around two per cent of homes that are empty as they are up for sale or looking for a tenant.  The myth that all the empty apartments are owned by offshore investors is not accurate, although the higher numbers in Melbourne may have some component of this.

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