The Rise Of Zombie Homes – A Solution To Australia's Rental Crisis
- Feb 22, 2024
- 4 min read
Written by: Annette Densham, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
Founder of Ethical Property Investments, Goro Gupta, has two goals: to provide people with the support they need to make safe investments while making a positive impact on society. He does this under two brands, Ethical Property Investments, and Empowered Liveability. With over 20 years in the finance industry, his personal motto is Do Good Make Money, and this mindset drives every action, decision, and interaction he has with the world.
In his sights of things to do good is the housing shortage in Australia. While he has created a solution for those who work with him, he said one of the challenges in Australia is the increasing number of zombie homes.
“The reality is many properties are vacant in Australia, while thousands spend their nights camped in a park, unable to find a rental home,” he said.
“Zombie homes are not a new problem; we have been dealing with empty houses for years. In fact, Hobart, which was ranked the most unaffordable city in Australia in 2018, experienced a massive shortage of long-term rental properties due to property owners shifting their focus to the short-stay market.”
The long-term implications of zombie homes are many, and there are actions government and property investors can take to address this issue.
The investor reality
Goro said property owners are always looking for ways to maximise their returns. “It's understandable that renting out properties on platforms like Airbnb can seem lucrative, especially when we can earn more at a weekend than from a week-long rental to a long-term tenant. However, we need to consider the bigger picture,” he said.
“Having a house sitting unused for four or five nights a week doesn't make sense when there are hard-working individuals living in their cars, caravans, or couch surfing. We must acknowledge the social responsibility associated with property ownership. There are alternative investment opportunities that can yield excellent returns, while also contributing to the housing needs of the community.”
The alarming statistics – Behind zombie homes
Let's delve into the statistics to grasp the severity of the issue. In October 2021, Goro highlighted the 13.5 million empty bedrooms in Australia within under-utilized, single-family homes.
“Recent census data during the lockdown revealed that there were over 1 million unoccupied properties in the country,” Goro explained. “Immigration is on the rise, international students are returning, and renters are increasing, according to the Australian Bureau of Statistics (ABS). “Despite this surge in demand, rental listings are still falling, creating a supply and demand imbalance that pushes rental prices even higher. With interest rate hikes and mortgage repayments also on the rise, property investors may be inclined to pass some of these additional costs onto their tenants.”
The need for government intervention
While it is admirable to hope that governments at all levels work together to solve this problem, the reality is that their efforts may not be sufficient.
“To combat the zombie homes phenomenon, property owners need to reimagine social housing policies and take matters into their own hands as property investors,” Goro said. “Ideally, government initiatives should focus on creating affordable housing options and implementing regulations that discourage the excessive conversion of long-term rental properties into short-stay accommodations. By fostering collaboration between the public and private sectors, we can alleviate the rental crisis and provide stable housing options for those in need.”
Airbnb: The displacement effect
Airbnb and similar platforms have undoubtedly disrupted the traditional rental market. While they offer convenience and flexibility to hosts and guests, there are unintended consequences. The surge in short-term and vacation rentals has priced out angry locals and transformed neighborhoods into zombie properties.
“By occupying properties that could otherwise be available to long-term tenants, Airbnb contributes to the scarcity of affordable housing. This displacement effect further exacerbates the rental crisis and widens the gap between property owners and those desperate for secure housing,” Goro said.
“Investors can still capitalize on Airbnb if they do it while still keeping renters in mind. I own a four bedroom, four bathroom on the Gold Coast, which he said isn't so desirable for renters. I bought it specifically for the holiday letting market, knowing it wouldn't impact the rental market.
It's not like it's sitting empty, it's just empty on some weekdays.”
Shifting focus to sustainable investments
Ethical Property Investments (EPI) launched an initiative to provide end-to-end housing solutions for older women and those fleeing domestic violence.
“Partnering with my other business, Empowered Liveability, a disability service provider, we are establishing disability-specific housing opportunities. This collaboration creates upmarket and well-kitted shared houses across Victoria, providing appropriate housing and support for vulnerable individuals,” Goro said. “Both of these businesses exist as property investment services for Australians who want a property investment portfolio with above-average returns while making a positive social impact.”
Annette Densham, Executive Contributor Brainz Magazine Multi-award-winning PR specialist Annette Densham is considered the go-to for all things business storytelling, award submission writing, and assisting business leaders in establishing themselves as authorities in their field. She has shared her insights into storytelling, media, and business across Australia, UK, and the US speaking for Professional Speakers Association, Stevie Awards, Queensland Government, and many more. Three times winner of the Grand Stevie Award for Women in Business, gold Stevie International Business Award, and a finalist in Australian Small Business Champion awards, Annette audaciously challenges anyone in small business to cast aside modesty, embrace their genius and share their stories.
