Sydney's ghost homes: How 200,000 homes sit VACANT in Australia's most expensive city - because foreign investors buy them and leave them to gather dust

  • Starr Partners CEO Douglas Driscoll said foreign investors left properties vacant
  • Real estate boss said unoccupied homes were making property unaffordable
  • He estimated number of empty investment properties had doubled since  2011
  • Mr Driscoll said Chinese investors left units empty to avoid wear and tear

By Nic White For Daily Mail Australia

Published: | Updated:

There are 200,000 homes on prime Sydney real estate sitting empty because foreign investors have bought them with no intention of living in them or renting them out, a leading real estate expert claims.

Douglas Driscoll, the chief executive of Starr Partners, estimates the number of unoccupied homes has almost doubled from 120,000 in 2011, in a city which is already the second most unaffordable in the world after Hong Kong.

Mr Driscoll believes the empty homes are a major contributor to Sydney's housing crisis, which has seen prices double in the past eight years and rise at an average of $222 a day.

'Foreign investors are only exacerbating the problem by buying properties and leaving them vacant,' he told Daily Mail Australia.

Treasurer Scott Morrison is expected to address the issue of housing affordability, and in particular, first home buyers getting into the property market (stock image) 

There are 200,000 homes in prime Sydney real estate sitting empty because foreign investors are snapping them up, a real estate boss claims. File photo

Foreign investors are accused of buying properties and leaving them vacant (terraces in inner-city Paddington pictured) 

Foreign investors are accused of buying properties and leaving them vacant (terraces in inner-city Paddington pictured) 

'(It) only gained genuine momentum in 2012 and in just a few short years we are already seeing 10-20 per cent of property being sold in some pockets to offshore buyers, which leaves a lot of Australians on the sidelines.'

Mr Driscoll said the government needed to realise the effect of empty homes on housing affordability and urgently start addressing it.

'Foreign investment is not the elephant in the room, it is a heard of elephants in the room and more needs to be done,' he said.

'These properties should be offered for rent, but if they were to hit the open sales market, it would certainly help alleviate the sparsity issue we are currently facing.'

The government has flagged the establishment of a 'bond aggregator' as an intermediary to attract greater private sector investment into affordable community housing (stock image) 

The chief executive of Starr Partners said empty homes were affecting housing affordability

Sydney's housing crisis has seen prices double in the past eight years and rise at an average of $222 a day

Sydney's housing crisis has seen prices double in the past eight years and rise at an average of $222 a day

Inner-city areas of Sydney are regarded as being more likely to have properties left vacant

Inner-city areas of Sydney are regarded as being more likely to have properties left vacant

Mr Driscoll said hotspots included anywhere in the inner-city or where new houses or apartments were going up, such as Alexandria, Waterloo, Green Square, Sydney's city centre, Parramatta, and even Blacktown.

'There are some developments where you can see straight through apartments because there's no furniture,' he said. 

'In my own building in Kirribilli there's 35 units and three of them are left empty.'

He said Chinese buyers were used to not receiving much of a return on investment and believed tenants lowered property values by putting 'wear and tear' on them.

'They bring that same mentality over here without doing the research,' he said.

The real estate boss said Chinese investors were leaving properties empty to avoid wear and tear if they weren't receiving much return on them

The real estate boss said Chinese investors were leaving properties empty to avoid wear and tear if they weren't receiving much return on them

'A lot of them are also buying their children's future, even if they are only in their teens, they are buying them now in highly desirable inner-city areas. 

'When their children are old enough they send them off to university and that's where they live. So they might sit empty for three or four years.'

He said Australia was also an attractive location because homes were much bigger than those in Asia. 

'On average, an Australian home has 89 square metres of floor space, while a country like China has about 33 square metres of space,' he said.

The head of Starr Partners wants financial penalties imposed for investors who left properties vacant for more than 12 months

The head of Starr Partners wants financial penalties imposed for investors who left properties vacant for more than 12 months

Douglas Driscoll argued a shortage of rental properties, caused by investors refusing to lease them out, was creating social and economic problems

Douglas Driscoll argued a shortage of rental properties, caused by investors refusing to lease them out, was creating social and economic problems

Mr Driscoll's said investors didn’t get capital gains tax concessions if the property was uninhabited for more than 12 months, but more needed to be done.

'The government should introduce significant financial penalties or inordinate property taxes for any property owned by a non-resident that is known to be empty for more than 12 months,' he said.

'NSW accounts for half of all investor mortgage finance. Such a strong level of investor interest in Sydney is pushing up the price of our dwellings and it’s time for government intervention to reduce this.

'I’m certainly not against foreign investment or property investment as a whole, but I do believe it has led to the market becoming hugely out of kilter, causing a multitude of social and economic issues.'

He said this policy wasn't aimed at holiday homes because those were almost always outside metro areas and not adding to housing affordability woes.

Foreign investors snapping up properties are pricing young people out of Sydney's housing market

Foreign investors snapping up properties are pricing young people out of Sydney's housing market

Investors are more likely to be hoarding properties in Sydney (in places like Eastwood in the city's north pictured) than in regional areas, the Starr Partners chief executive said

Investors are more likely to be hoarding properties in Sydney (in places like Eastwood in the city's north pictured) than in regional areas, the Starr Partners chief executive said

Douglas Driscoll praised Mirvac's Olympic Park development in Sydney's west for setting aside flats for first-home buyers and only requiring a five per cent deposit

Douglas Driscoll praised Mirvac's Olympic Park development in Sydney's west for setting aside flats for first-home buyers and only requiring a five per cent deposit

Mr Driscoll applauded developments like Mirvac's new high-rise project in Olympic Park, in Sydney's west, where the first 60 of 690 flats were set aside for first home buyers for only a five per cent deposit.

A housing affordability survey last month ranked Sydney as the second more unaffordable city in the world behind only Hong Kong.

The median house price now stands at $1.1 million, 12.2 times the average annual wage, and dropping to $850,000 when units were included.

It doubled since 2009, increasing 16 per cent in the past year alone, with the most sought-after suburbs rising by more than $1,000 a day.  

Sydney

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