A sustained three-year property boom in Australia is leaving Melbourne awash with empty homes. This is a naturally occurring phenomena wherever supply outstrips demand.
In a report by Prosper Australia, Melbourne, Australia’s second largest city, growing numbers of local landlords and absentee overseas owners focusing on price gains and forgoing rental income have resulted in locked up homes.
Some 82,724 properties, or 4.8% of the city's total housing stock, appear to be unused, an estimated occupancy rates derived by gauging water usage. In the worst-hit areas, a quarter of all homes are empty, said Prosper.
The study assessed 1.7 million residential properties in and around Melbourne during 2014. Those using less than 50 litres of water a day - the rough equivalent of one shower and a flush of a toilet - were deemed vacant.
Driven by a wave of Chinese buyers and record-low interest rates, average home prices have soared to about A$700,000 in Melbourne and around A$1 million in Sydney.
But with prices now cooling, the empty accommodation also masks a hidden glut of supply that could worsen any housing slump.
Sydney, where high-rise blocks have sprouted in the inner suburbs, is also likely to have a vacancy problem. Surging home prices triggered a boom in high-rise construction in Melbourne's inner-city suburbs, squashing rental yields and leaving landlords with little incentive to find a tenant, said Cashmore.
"There is a wall of money that is trying to get into Australia," Cashmore said. "To fight those forces is going to be very difficult."
Sudden property price declines or an economic slowdown could well unveil the vacant supply, when owners would start to sell up or look for rental income.