Sydney remains the epicentre of rental pain. Credit:Rob Homer "Greater Sydney continues to be at crisis levels in terms of rental affordability," the report by SGS Economics & Planning, Community Sector Banking and National Shelter finds. "The average renting household spends near 28 per cent of its total income to pay the median rent of $480 per week." A senior associate at SGS Economics & Planning, Ellen Witte, said a tax on vacant properties in Sydney could free up some new supply in certain areas. "An ongoing issue in Sydney is that many city apartments remain vacant, often owned by foreign investors. At the same time vacancy rates of private rental properties in the market are very low. "A tax on vacant dwellings could be an effective measure to target specific geographic areas with high levels of vacant dwellings," she said.

In a bid to ease his own city's rental affordability crisis, the mayor of Vancouver, Gregor Robertson, earlier this month announced a tax of 1 per cent of the value of all investment properties left vacant for six months. From next year, Vancouver property owners will be required to make a "property status declaration" detailing occupancy of their property. Owners who fail to make a declaration will pay the tax, and those who make false declarations face fines of up to $C10,000 per day. Net revenue from the new tax will be reinvested into affordable housing initiatives. The president of National Shelter, Adrian Pisarski, said a tax on vacant homes was worth considering as part of a broader strategy to improve rental affordability, including cracking down on capital gains tax exemptions, investing in social housing and providing incentives for large-scale investment in affordable rental housing. "We risk becoming a nation of speculating spivs locking out generations of ordinary folk from home ownership while exploiting them on rents to cover our high debts on investment property," Mr Pisarski said.

"Taxing vacancies would either encourage vacant property to be added to supply or, if left vacant, collect funds which could be redirected to a dedicated affordable rental supply steam, preferably owned and operated by community housing providers." Economist Saul Eslake said the idea was worth considering in Australia, but posed some difficulties. "I think it is worth considering," Mr Eslake said, "provided there are sufficient exemptions for genuine reasons as to why a property might be vacant for periods of time." Such reasons might include, according to Mr Eslake, if owners were overseas or interstate for an extended period but intended to return, if construction work was in progress, in cases of deceased estates where a will was being contested or cases where an owner had recently gone into aged care. It was unclear, too, how such a tax would apply to holiday homes, Mr Eslake said.

According to the rental affordability index, rental pressures are most acute in inner-city areas close to jobs and transport. Sydney CBD rents top the list, soaking up 68 per cent of the average Sydney household income. Rents also soak up more than 60 per cent of average household income in most inner-city areas, including Paddington, Coogee, Manly, Balmain and Bondi. The index uses a 2011 census measure of average household earnings for the Greater Sydney area, inflated for wages growth. For rents, it uses a median of NSW rental bonds data for all dwellings by postcode. The president of Prosper Australia, Catherine Cashmore, who has collected data on water usage to show there are 80,000 empty homes in Melbourne, said an empty home tax was an intuitively appealing policy that could pave the way for greater reforms. "Obviously the option of moving away from stamp duty towards a broad-based land tax with no threshold would solve the problem. But an empty homes tax may be a step in the right direction for Australians to realise they can't just keep buying for speculative reasons."