According to 2011 census, in Sydney's "emptiest" neighbourhood of the CBD, Haymarket and The Rocks, one in seven dwellings was vacant. The mismatch between housing supply and need could be artificially inflating Sydney's housing shortage, experts say. Close behind were Manly-Fairlight, Potts Point-Woolloomooloo, Darlinghurst and Neutral Bay - Kirribilli, which all had vacancy levels above 13 per cent. These neighbourhoods, together with central Sydney, account for nearly 7200 empty homes. The analysis of the 90,000 unoccupied dwellings across metropolitan Sydney compared the number of empty homes in a suburb against the rate of return investors made by renting out a property.

It found that properties in neighbourhoods with lower rental yields and higher expected capital gains were more likely to be unoccupied. Gordon-Killara on the north shore had the highest share of vacant apartments, with more than one in six unoccupied on Census night. By contrast, only one in 42 dwellings (2.4 per cent) in Green Valley-Cecil Hills, in Sydney's west, was unoccupied. The results suggested property investors in some of Sydney's most sought-after areas were focusing on growing the value of their properties, with losses offset by tax incentives such as negative gearing and capital gains concessions. This could leave investors indifferent to whether the dwellings were occupied, Dr Troy and Professor Randolph said.

"If you choose to accept that there is a housing shortage in Sydney, then the sheer scale and location of these figures strongly suggest that this is an artificially produced scarcity," they said. The effect of this, they added, was to limit the availability of housing where it was most wanted. The trend was likely to have become more pronounced since 2011, "as more housing is being delivered precisely in the locations where there appears to be a concentration of homes standing empty". Apartments in neighbourhoods with lower rental yields (about two per cent) were 2.5 times more likely to be unoccupied than those in neighbourhoods with rental yields of 6 per cent or higher.

Houses were more than twice as likely to be unoccupied. Grattan Institute chief executive John Daley said anecdotally there had been an increase in overseas buyers, some of whom may be less concerned about leaving a property vacant. But he cautioned that there could be a number of reasons for recording a property as unoccupied in the Census, such as the dwelling being between owners or tenants.

"Even if your rental return is 1.5 per cent, it's tough to believe it's not better than nothing," Mr Daley said. Nevertheless, a similar trend of "speculative vacancies" has been documented in Melbourne by think tank Prosper Australia, which based its assessment on abnormally low water usage. Almost 83,000 properties, or 4.8 per cent of Melbourne's total housing stock, appeared to be unused based on water usage of less than 50 litres a day – including up to 19 per cent of investor-owned property, the December report found. Chris Johnson, the chief executive of developer lobby group the Urban Taskforce, said the Census findings likely reflected the fact that those at the higher end of the market had the luxury of keeping their property empty for part of the time. "The supply issue is actually about affordability," he said. "You can well say there are a whole lot of $2 million apartments that aren't fully used at the moment ...but people just don't have the money to be able to move into that sort of apartment."

But a proposal being developed by the NSW Federation of Housing Associations would see long-term vacant properties hit with higher council rates, as is done in parts of the UK. "If you're not using the home as a place for people to live ... in this crisis I think it's reasonable that there's an extra charge on that property," said the federation's chief executive Wendy Hayhurst. The additional revenue generated could be directed towards affordable housing, Ms Hayhurst said.