The state of unoccupied dwellings and spare bedrooms in Australia

Did you know that there are some one million unoccupied private dwellings across Australia?

Yes - that's what the latest Census tells us.

This equates to about 10% of Australia’s private residences.

What does an unoccupied dwelling mean?

According to the ABS, an unoccupied private dwelling is:

• a vacant one at the time of the census (usually around mid-August every fifth year) and the reason for the vacancy includes being a holiday home - for the owner’s use or rented out commercially i.e., Airbnb;
• an investment property without a tenant;
• a newly built but vacant dwelling;
• a habitable dwelling being renovated and/or a vacant dwelling for sale or lease.

This count excludes non-private dwellings such as hotels and motels, caravans and similar ‘housing’ estates, marinas, prisons, boarding schools, defence, and religious establishments plus other communal housing, such as aged care.

The occupancy for most Australian dwellings is determined by the census form.

Unoccupied dwellings have been the case for a long time across Australia

In fact, the growth in unoccupied dwellings has slowed down between the last two census periods.

This slowdown is due to two factors – one, the improvement in the data, as outlined above and two, because of the Covid pandemic, which saw a lot more holiday homes being utilised.

On that note, many have commented that the reason for the high number of unoccupied homes is Airbnb.

Yet it is estimated that just 100,000 whole dwellings are listed for rent on Airbnb across Australia.

So, if there are 100,000 Airbnb-(highly unlikely but let’s roll with the flow for now) then this accounts for 10% of unoccupied homes.

In addition, there are studies to suggest that one in every 100 Australian households holds a holiday home for their personal use.

Assuming they were all vacant in August last year, then that would account for another 100,000 unoccupied homes.

Unoccupied dwellings in regional areas

Quite a few of Australia’s unoccupied dwellings are in regional towns and tourist-orientated locations.

I think it is more reasonable to assume that some of these holiday homes were occupied in August last year.

So, if say half of these homes were occupied, then combined there were some 50,000 unoccupied Airbnbs and 50,000 unoccupied holiday homes for personal use last year.

If this is true, then ‘holiday’ homes account for 10% of the unoccupied dwellings in 2021.

It has also been mentioned that a lot of the reason for the unoccupied count is due to dwellings being sold or for lease.

This accounts for some of the unoccupied stock, but not as much as some think.

There were 625,000 dwelling sales across Australia last year.

If these sales, took on average, three months from initial listing to settlement - which given the heat in the housing market at the time, isn’t unrealistic - then some 150,000 dwellings or 15% could have been unoccupied due to the sales process.

Furthermore, there were some 60,000 vacant rental properties across the country in August last year, accounting for 6% of the unoccupied stock.

Our recent work suggests that that one in every 200th renovation is big enough to exclude occupation for a period of time.

So, this means around 50,000 dwellings could be unoccupied, which represents another 5% of the total.

Therefore, in total ‘sales, for lease and renovations’ account for about 210,000 unoccupied dwellings or roughly 20%.

So, what makes up the 70% or 700,000 unoccupied dwellings?

In short, these are investment properties that are locked up rather than tenanted.

Empty bedrooms

The recent data I collated suggest that three-quarters (77%) of our dwellings have one or more spare bedrooms.

Homeowners without a mortgage (who are usually older) have the most spare bedrooms (91%) whilst those renting have less.

Yet some 74% of renters say they have at least one spare bedroom.

A bedroom in this case is one that is large enough to fit in a double-sized bed and has a window and/or direct access to natural light.

Typically, the room dimensions are at least 3 metres x 3 metres.

It is interesting to note that 84% of detached houses have a spare bedroom, whilst just half of Australia’s apartments have one or more underutilised bedrooms.

In fact, some 13,600,000 bedrooms across Australia are unoccupied when it comes to someone sleeping in them on a regular basis.

If two people, on average, share one of these spare bedrooms - they could hold two single beds - then these underutilised bedrooms could house Australia’s entire population.

About Michael Matusik Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive