Australia’s housing landscape harbours a hidden story within its vacancy statistics. While the national unoccupied dwelling rate sits at 10.1 per cent, some regional locations record vacancy rates exceeding 60 per cent.
These astronomical figures reveal the concentrated geography of Australia’s holiday home phenomenon and challenge fundamental assumptions about property investment returns.
Using unoccupied housing data as a proxy for holiday home concentration reveals regional markets operating under entirely different economic principles than metropolitan residential investment.
The ten locations with Australia’s highest dwelling vacancy rates span five states plus Tasmania, creating property markets that defy conventional performance expectations.
The island premium paradox
Moreton Island claims Australia’s highest unoccupied dwelling rate at 66 per cent, yet defies assumptions that extreme vacancy indicates market weakness. Properties command a median price of $1.25 million, with annual growth of 11.5 per cent and remarkable 10-year appreciation of 140.9 per cent.
The island’s success illustrates how scarcity can drive values independent of traditional investment fundamentals. Vehicle access requires four-wheel drive capability and ferry transport, yet this isolation creates premium positioning that conventional metrics struggle to capture. However, building materials and tradespeople require ferry transport, increasing maintenance costs significantly while insurance premiums often run 30-40 per cent above mainland alternatives.
State-by-state dynamics
Victoria dominates premium holiday home markets, claiming four of the ten highest unoccupied locations. Lorne-Anglesea commands the highest median price at $1.57 million, yet records modest 3.8 per cent annual growth. Point Nepean follows similarly at $1.31 million with identical 3.8 per cent growth. Both suggest premium markets reaching natural appreciation limits as affordability constraints restrict buyer expansion.
Tasmania contributes two intriguing markets demonstrating the island state’s tourism transformation. Central Highlands records 58 per cent unoccupancy with exceptional 157 per cent 10-year growth at $321,250 median, while Glamorgan-Spring Bay shows 132.4 per cent decade appreciation despite a recent 6.5 per cent annual decline.
NSW’s Callala Bay-Currarong represents South Coast dynamics with 48 per cent vacancy, delivering solid 6.5 per cent annual growth and 126.8 per cent 10-year appreciation at $1.15 million median. The location benefits from Sydney and Canberra proximity while maintaining coastal lifestyle appeal.
South Australia’s Yorke Peninsula – South demonstrates regional affordability potential, combining 52 per cent unoccupied dwelling rate with 12.7 per cent annual growth at $490,000 median. Western Australia’s Gingin-Dandaragan shows strong 11.4 per cent recent growth at $660,000, benefiting from Perth proximity.
The environmental cost reality
Highly unoccupied locations face environmental risks that many traditional residential investment confront. Coastal exposure accelerates maintenance cycles through salt air corrosion, with insurance premiums often 20-30 per cent above regional averages. Bushfire risk affects multiple locations, requiring elevated insurance and potential evacuation during peak tourism periods.
Climate change projections indicate these pressures will intensify, with sea level rise, increased storm frequency, and extended bushfire seasons threatening long-term viability in exposed locations. Successful markets increasingly factor environmental resilience alongside scenic appeal.
Infrastructure and regulatory challenges
Highly unoccupied regions operate infrastructure designed for seasonal rather than permanent populations. Holiday home owners encounter service connection delays, limited provider options, and higher charges reflecting peak-period capacity constraints.
Recent regulatory changes have altered investment calculations. Victoria’s 7.5 per cent levy on short-stay platform revenue affects four locations in the analysis, while various councils implement rates surcharges for Airbnb properties. These measures respond to housing affordability pressures but reduce rental income potential for holiday home investors.
Tax implications add complexity, with Australian Taxation Office guidelines creating compliance requirements for dual-purpose properties and expense deduction limitations for properties not genuinely available for rent year-round.
The performance paradox explained
The relationship between high unoccupied dwelling rate and performance reveals fundamental differences between tourism appeal and residential investment dynamics. Moreton Island’s exceptional growth alongside extreme vacancy demonstrates how exclusivity can drive returns independent of rental income potential.
Conversely, established premium markets like Lorne-Anglesea show how tourism success doesn’t automatically translate to sustained appreciation. These locations may have reached value ceilings where growth depends on broader economic factors rather than tourism demand.
Tasmania’s strong long-term performance across both locations suggests emerging holiday home markets can deliver substantial returns during development phases, but face volatility as seasonal patterns establish and infrastructure constraints emerge.
The data reveals three distinct performance categories: premium established destinations with moderate growth, emerging markets with strong appreciation potential, and regional affordable locations offering balanced returns with lower entry barriers.
Investment implications
Australia’s highest unoccupied regions demonstrate that holiday home investment operates under principles distinct from conventional residential analysis. Tourism appeal, environmental resilience, infrastructure capacity, and regulatory stability matter more than traditional metrics like rental yields or employment proximity.
Environmental risk management becomes crucial, with properties in exposed locations facing insurance cost escalation and potential value impairment. Regulatory risk represents an emerging factor, with policy measures likely to continue affecting short-term rental income potential.
The geographic diversity across all mainland states plus Tasmania demonstrates that holiday home opportunities exist across multiple market segments. Success requires understanding unique cost structures, risks, and market dynamics that distinguish these locations from conventional residential investment. The data suggests informed analysis can identify opportunities for both lifestyle and financial returns, but traditional investment wisdom may not apply in markets where scarcity, exclusivity, and seasonal demand patterns drive performance more than fundamental economic indicators.
Vanessa Rader is Ray White Group Head of Research