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Jan 10

Qingjian CCK EC

Melbourne Australia is left with a glut of vacant homes after a property boom of three years.
Record low interest rates prompted a surge of housing purchases, mainly by overseas investors. The resulting artificial housing shortage drove the average home prices up to A$700,000 (S$711,940) in Melbourne and about A$1 million in Sydney.
Many Qingjian Choa Chu Kang EC landlords and overseas investors choose to keep their properties vacant, trading rental income for price gains, according to a report by the Melbourne based research group Prosper Australia.

Qingjian Choa Chu Kang Ave 5 Tender

An estimated 4.8% of Melbourne’s total housing supply for Qingjian Realty EC, equal to about 82,724 properties, are left unused according to the report. Occupancy rates are determined by current water use. Less than 50 liters a day – roughly equivalent of one shower and one toilet flush – qualifies as an empty property. In the most impacted areas, 25% of all homes are designated vacant.

Prosper Australia is lobbying for tax reform to create Choa Chu Kang Avenue 5 housing that is more affordable.

Catherine Cashmore, author of the report “Speculative Vacancies” warned that “Those properties need to be utilized. Having property sitting vacant has a very high cost on the economy. It’s very destructive to our national prosperity,”

With housing prices cooling, the hidden excess of supply could worsen a possible future housing slump in Choa Chu Kang Ave 5.
This study, currently in its eighth year, reported on the 1.7 million residential properties in and around Melbourne in 2014.

Sydney also has a likely Qingjian Realty EC vacancy problem, said Ms. Cashmore. High rise buildings amongst the inner suburbs are more opaque when deciphering water usage because data for individual apartments isn’t as complete as it is in Melbourne.

Choa Chu Kang EC by Qingjian Realty

She explained that unnecessary high rise construction in Melbourne’s city suburbs lowered rental income to the point where landlords have less motivation to find a tenant.

Credit Suisse Group estimates that Chinese buyers were prepared to take out 20% of new homes across Australia by 2020, an increase of 5%.

The Prosper report doesn’t disclose which properties are owned overseas, but it stated that a “significant proportion” of foreign-owned real estate is sitting vacant and adding to price inflation.

“There is a wall of money that is trying to get into Australia,” Ms. Cashmore said. “To fight those forces is going to be very difficult.”

Ms. Cashmore, also a buyer’s agent, is familiar with some apartment blocks in Choa Chu Kang Ave 5 where entire floors are purchased but remain vacant. Many owners are from Asia and are rarely seen.

Choa Chu Kang Avenue 5

“It’s a growing problem,” said Cameron Kusher, a Brisbane-based analyst at CoreLogic, a property information provider. “If these properties aren’t being occupied, it doesn’t do a lot to fix overall housing supply. It’s always going to be the risk when you sell to offshore investors.”

Clearly the solution to Australia’s property affordability barriers is not found in increased home construction. Prosper concludes that there is not a housing supply crisis, but unused properties and an artificial scarcity.

An end to the housing boom, and correlating falling Qingjian CCK EC home values, may prompt owners to seek more renters.

“Suddenly, you find there’s no one there to buy it or nobody to rent it. That’s a common pattern in a housing crash,” Ms. Cashmore said. “What we’re trying to do is to make it visible before it happens.”

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