Water consumption data released by Prosper Australia on Saturday found 27,408 dwellings across Melbourne were empty in 2023, and a further 70,453 were barely used.
The empty properties could home those on Victoria's social housing waitlist twice over, leading to calls to use existing housing to solve the crisis.
The study used data from Melbourne's three water retailers - Yarra Valley Water, South East Water and Great Western Water - across 233 postcodes for the 31 councils areas in Metropolitan Melbourne.
An empty home was counted by Prosper Australia as using zero litres each day over a calendar year, while an under-used home consumed between zero and 50 litres a day.
Homes Victoria's most recent housing register revealed 48,620 people had applied for a property on the Victorian Housing Register.
Calls for the government to increase land tax
University of New South Wales senior research fellow Chris Martin said the data was timely as it demonstrated the need for governments to encourage property owners to bring more housing to market.
"The best spur is land tax," he said.
"By making it more costly for owners to hold back housing, land tax improves housing supply and affordability."
Premier Jacinta Allan unveiled proposed 2051 housing targets in June for all Victorian local government areas, under which two million homes would be build in metropolitan Melbourne.
The state government noted that Victoria had the largest annual population growth of all Australian states.
Think Forward chief executive Thomas Walker said the sheer scale of vacancies supported calls to address how property was taxed.
"We can continue to enrich speculators in the hope that some supply trickles down to those who need it," he said.
"Or we can rethink how property is taxed, shifting the rewards from speculation to actually providing homes for people."
Melbourne's Vacant Residential Land Tax has been in place since 2018 for homes left empty for six months of the year in inner and middle suburbs.
From 2025, the tax will extend to the rest of Victoria and the government has promised increased enforcement.
