Comment on @jack_toohey on why the housing crisis is not caused by migration

• eureka@aussie.zone ⁨3⁩ ⁨weeks⁩ ago

  I had a quick search, this isn’t something I’ve properly looked into, but empty homes are valuable:

  Speculative real estate investment can lead to homes being left vacant for quite long periods of time, as in some cases this helps to preserve their condition for resale and saves the investor from having to shell out for upkeep and maintenance. In cities with high-value real-estate like Melbourne, Sydney, New York and London, housing prices have risen much faster than wages, and many investors know that simply buying and holding property can be a more effective investment strategy than buying to rent. As Karl Fitzgerald of the Australian non-profit Grounded Community Land Trusts and member of GEHN notes:

  ‘If you consider that there’s been an 18% increase in Australian property values this year, that’s triple the rent you could make, so why bother renting it out?’ (GEHN 2022)

  Jack Portman - “What is the value in an empty home? A perspective from Action on Empty Homes and the Global Empty Homes Network” www.tandfonline.com/doi/…/13604813.2024.2390754#d…

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  • Salvo@aussie.zone ⁨3⁩ ⁨weeks⁩ ago

    This is why there have to be significant taxes on vacant rentals (including short term rentals like AirBNB).

    It has to be made more expensive to keep a property vacant than to rent it out and maintain it, without increasing rent.

    Rent assistance is just corporate welfare that drives up rent.

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  • null_dot@lemmy.dbzer0.com ⁨3⁩ ⁨weeks⁩ ago

    I don’t think that says what you think it does.

    It doesn’t suggest that speculative vacancies are a driver of the housing crisis in Australia.

    “Buying to Rent” means buying with no intention to sell after a given period of time. It means making an investment focused on the annual rent return.

    Speculative real estate investment can lead to homes being left vacant for quite long periods of time

    Often a speculative investor might leave a home vacant while they list it for sale. That’s not the same as purchasing a property with the intention of leaving it vacant.

    in some cases this helps to preserve their condition for resale and saves the investor from having to shell out for upkeep and maintenance

    This doesn’t make any sense at all. An investor reluctant to “shell out” for upkeep and maintenance is exactly the type of investor that needs the regular rent income to help cover the other costs of ownership like rates, body corporate, interest, et cetera.

    Census data shows dwelling occupancy rates have been consistent over the last 15 years:

    Image

    Note that these rates do not imply “speculative vacancy” is ~10%, as there are many reasons a property may be vacant on census night. They do however demonstrate that vacancy is not the cause of the current housing crisis.

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    • eureka@aussie.zone ⁨3⁩ ⁨weeks⁩ ago

      Thanks for the detailed reply.

      It doesn’t suggest that speculative vacancies are a driver of the housing crisis in Australia.

      I was quoting that to explain that speculative vacancy can be a valid, highly profitable strategy for investors. That quote alone isn’t evidence, yes.

      An investor reluctant to “shell out” for upkeep and maintenance is exactly the type of investor that needs the regular rent income to help cover the other costs of ownership like rates, body corporate, interest, et cetera.

      I don’t understand how this can be assumed. Investors wanting to reduce cost and risk doesn’t imply they need regular income. Rich investment funds would have the same incentive to do that, right?

      They do however demonstrate that vacancy is not the cause of the current housing crisis.

      Yes, it’s not going to be the cause. There isn’t going to be a single cause, like you said it isn’t even the only cause of mass vacancy. In fact, given it’s used as a long-term investment strategy, I suspect that this is a long-term factor that enabled or accelerated the crisis, rather than being an immediate catalyst that suddenly happened a few years ago.

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      • null_dot@lemmy.dbzer0.com ⁨3⁩ ⁨weeks⁩ ago

        Investors wanting to reduce cost and risk doesn’t imply they need regular income

        income offsets the cost and risk.

        Like if you own a house that costs $5k in while vacant, but an extra $5k in maintenance while rented, why wouldn’t you rent it for $50k? Investors always want that extra $40k. There is some risk but it’s manageable.

        Speculative vacancy is, IMO, barely worth a mention as regards Australia’s housing crisis. People might want their investment properties vacant in very specific circumstances for limited periods of time but not in a general “this property has been vacant for 5 years” kind of way.

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