Property Spruikers Claim Australia Suffers from a ‘Chronic Housing Shortage’
Last Friday we sent a request to Money Morning readers. We asked if they had any authentic research to support the claim made by property spruikers that Australia suffers from a 'chronic housing shortage.'
We assumed there must be such research in existence. After all, it is the main basis the property bulls make to support the idea of continually rising property prices.
They further argue the shortage is magnified due to immigration and natural population growth, so that there are not enough houses being built to accommodate everyone.
That should make you think that data supporting the argument is easily available.
Well, you're right. It is easily available.
However, we can only think that no-one has ever read it.
Because if they have, they could not possibly conclude that there is a 'chronic' housing shortage.
The numbers which represent the entire basis for the 'chronic' housing shortage just don't add up.
Shortly, I'll show you once and for all that Australia does not have a 'chronic' housing shortage. Further, I'll show you that as soon as government runs out of ways to manipulate the housing market, prices will collapse.
To be honest reader, your editor is almost speechless. For years we've heard the argument about demand being far in excess of supply.
We've lost count the number of times the likes of Christopher Joye, Rory Robertson and the Housing Industry Association (HIA) have told us about the shortage and how this is the reason why property prices cannot fall.
But the one thing that always struck us was the lack of referenced evidence. We've hardly ever read one of these 'experts' point towards ironclad proof.
Sure, plenty of times we've read vague numbers being thrown around. As if merely saying there's a shortage and then applying a number to it is somehow proof enough.
Well, last Friday we decided enough was enough.
On a whim I wrote to Money Morning readers to ask for help:
"Aside from yourself, there are now about another 40,000 people who receive Money Morning every day. I know for a fact there are property bulls and bears among the audience.
Therefore if you have access to authentic research which identifies the 'chronic' housing shortage in Australia, please email to the Money Morning mailbag at: moneymorning@moneymorning.com.au
I would be glad to read it and I'm happy to publish the highlights."
I soon wondered what kind of response I would get. I also wondered why I hadn't simply 'Googled' for it. Was your editor being lazy? Or could we just blame it on being a Friday?
Well, the responses we received made us realize the following...
First, it was laziness. A simple search on Google would have given us the information we needed in a flash.
Second, we thank Money Morning readers Laurie and Rob. Both of them provided the link to the research that is the basis for the 'chronic' housing shortage argument.
Here's the link to the report.
It's 193 pages long, so you may want to brew a cup of tea and tell your receptionist to hold all calls for a few hours.
But even before you get out of the Executive Summary on page xiv you're hit with a giveaway to how unreliable the data in the report is:
"The Council stresses that projections beyond two years are speculative..."
Two pages later:
"The Council estimates that a minimum of around 85,000 dwellings is the gap (unmet need) in the supply of housing in 2008... The Council acknowledges the crudeness of this estimate and also points out that there were some 830,000 vacant dwellings in Australia at the time of the 2006 Census."
There's the source of the 85,000 shortage. I've actually removed a sentence that followed because I want to highlight it separately.
But before I do, remember, this report is the basis for every single argument made by property spruikers.
So, how have they come to the conclusion that there was a shortage of 85,000 dwellings in Australia in 2008?
This is the part that left me speechless...
"The Council estimates that a minimum of around 85,000 dwellings is the gap (unmet need) in the supply of housing in 2008. This is based on the incidence of homelessness and the low level of vacancy rates in the private rental market."
The underlining is my emphasis.
There you have it. The housing market will always rise because of the 'chronic' housing shortage, a 'chronic' housing shortage being measured by the number of homeless people.
According to the report, the dwelling gap, which is the difference between the demand for housing and the supply is made up of:
Dwellings required to address homelessness - sleeping rough = 9,000
Dwellings required to address homelessness - staying with friends and relatives = 35,000
Dwellings required to house marginal residents of caravan parks = 13,000
Dwellings required to increase rental vacancy rate to 3% = 26,000
Now, the human calculators out there may think, "Hang on, that's only 83,000."
You'd be right. But in true statistician fashion, they are only capable of dealing in numbers rounded to the nearest 5,000...
Hence, there was a housing shortage of 85,000 homes in Australia in 2008.
But the report doesn't stop there. Not content with providing a suspect set of numbers for 2008, the report goes on to outline the shortage for future years.
So, based on the 85,000 starting number for 2008, this has been extrapolated to 108,000 for 2009, all the way up to 431,000 for 2028.
We're not surprised the property spruikers have never mentioned the numbers behind the gap. If they did they'd be laughed out of town.
To argue that a housing gap and therefore ever-rising property prices can be based on the number of homeless people is utter nonsense. We don't think we've ever come across such statistical foolishness.
For a start, there is a big difference between the desire for a dwelling and the demand for a four-bedroom home in the suburbs, or a two-bedroom townhouse in the inner city.
Put it this way, we haven't seen too many house auctions, but odds are first home buyers aren't facing stiff bidding competition from the local hobo.
And furthermore for the researchers to claim that the lower rental vacancy rate implies a shortage of housing is also statistical smoke and mirrors. Perhaps we could make the target vacancy rate 4% and argue there is an even bigger 'chronic' shortage in housing.
The facts are, as we suspected all along, the case for a housing shortage in non-existent. It does not exist. There is no housing shortage.
That's because it is price that is the major problem in the housing market. Prices are at unsustainable levels brought about by the manipulation of demand and supply by the various levels of government.
As soon as the manipulation ends, price discovery will lead to a collapse in the housing market.
Only then will the property spruikers realize there is not, and never has been a 'chronic' housing shortage.
Kris Sayce
for The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
Related Articles:
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About the Author
Kris Sayce began his financial career in the City of London as a broker specializing in small cap stocks listed on London's Alternative Investment Market (AIM). At one of Australia's leading wealth management firms, Kris was a fully accredited adviser in Shares, Options and Warrants, and Foreign Exchange. Kris was instrumental in helping to establish the Australian version of the Daily Reckoning e-newsletter in 2005. In late 2006, he joined the Melbourne team of the leading CFD provider in Australia.
Comment by Justin on 24 August 2009:
I can't fault this logic.
I think the bubble has burst, maybe just deflating slowly at present due to inflation. And saying things will be different in Australia, because Australia is not the US or UK, is like saying the record high price of petrol (and subsequent fall) in Australia and the US & UK in 2008 was for different reasons. Illogical.
Comment by Paul on 24 August 2009:
Nice article, Kris. I just wonder how many people - not just first home buyers - out there are actually 'thinking' about the current aberration(s) in the Australian property market. I think your article is spot-on, but I just think the spruikers are winning the persuasive argument.
I have suspected this statistical anomaly (ruse?) for a long time now and I have tried, and failed, to persuade many friends and colleagues of its powerful influence on property prices. But, every time I raise the issue, I'm told that, 'things are just different these days.' The strange thing is, everyone says the same thing, 'things are just different these days'. Intellectuals, factory workers, neanderthals, real estate agents (surprised?), accountants, everyone. Even statisticians at the ABS. I work at the ABS and I've lost count of the number of fellow demographers (yes demographers) that have taken on big (unsustainable) debt to finance their 'first home'.
You are correct in your argument, Kris, but, I'm sure you'll agree, Today Tonight, A Current Affair, the REIA, and the rabid spruikers are winning this debate. Actually, did you hear about the 'Holy Grail of beauty'? A 'cosmetic injector' (a genius?) injects you with your own plasma (not your TV) in order to reduce your age - yes, they have invented a real Flux Capacitor and Today Tonight told the story first. 'We have experienced our own faces get younger by the day,' said Nicole, the 'cosmetic injector'.
If people are getting younger 'by the day,' and more babies are being born, and more immigrants are coming to Australia, and... I'm off to the real estate agent.
Comment by Cyber Cynic on 24 August 2009:
I think the claim of a shortage of 85,000 dwellings is BS also, but, I'm sure there is a slight shortage of "decent" houses in "decent" suburbs which no doubt influences the market. Sure, you can drive 1 1/2 hours from the city (and most services)to downtown woop woop and find empty homes and in turn save maybe $100k on the purchase price, but, what you save on mortgage repayments you'll spend on vehicle/travel expenses whilst slowly going insane whilst sitting in traffic or on the train each day etc, etc....Then, next thing, you want to "upgrade" to a home closer to town (and services) for which you will happily pay a "premium" to keep your sanity and spend less time on that damn train or in that bloody car!!!
I'm not a RE Bull as I don't see RE going up in value in a hurry, but I also don't see it falling more than 10% maximum either (that's if there is a "correction").... Any dwelling within 30 minutes drive of a major city centre is going to hold its value because people will always want/need to have reasonable access to services and decent infrastructure. Human nature will ensure a steady demand for houses in good areas as most of us want to be comfortable and many families need easy access to comprehensive health infrastructure (older population), education and government services.
No massive shortage of housing in general - but nothing close to a surplus of good RE either I'd say!!!
Comment by Dan on 24 August 2009:
Try this one on for size:
http://bubblepedia.net.au/tiki-index.php?page=OverbuildingByLocation&highlight=overbuilding%20by%20location
Comment by David on 24 August 2009:
Another interesting article today: http://www.sciencealert.com.au/news/20092408-19603.html
Comment by makato on 24 August 2009:
You said: "As soon as the manipulation ends, price discovery will lead to a collapse in the housing market."
Even if this is true, WHEN will the manipulation ever going to end? The reason I ask this is because I don't think the manipulation is ever going to end. It is in the politician's best interest to keep their property prices high as possible.
(Not that I wouldn't be happy if it did though, I'm trying to get a home on my own, single income and I find it extremely tough, if not impossible.)
Comment by Daniel on 24 August 2009:
hmmm...Rising house prices are directly related to increases in homeless people? This sounds very similar to the research on the increase of pirates is directly related to global warming/cooling - http://www.venganza.org/2008/04/04/pirates-temperature/
Lets hope the remaining pirates don't become homeless or we will be facing even higher property prices and severe global warming!
Comment by Economist on 24 August 2009:
This article is a fraud.
Christopher Joye for one has referenced truck loads of independent research including:
1) Estimates from the Commonwealth Treasury with housing demand running at over 200,000 homes pa and supply at around 150,000 homes pa;
2) Numerous recent statements by the Reserve Bank of Australia.
To quote the RBA Deputy Governor in late 2008:
“In the US, the rise in house prices elicited a very strong supply response…Here in Australia the rise in house prices did not elicit such a strong supply response…In fact, the consensus is that there is currently a shortage of dwellings.”
To quote the RBA Board minutes from last week:
“The recent strength in housing prices was fairly widespread, including in the higher-priced suburbs, where repeat buyers predominate. Members observed that the strength in housing prices also reflected other factors, including low mortgage rates, strong population growth and inelastic supply. They noted that commencements in recent years had been below estimates of underlying demand.”
To quote the RBA’s August Statement of Monetary Policy
“Over the past few years, between 140 000 and 150 000 dwellings have been built annually, which is well below most estimates of underlying demand. However, in late 2008 the flow of monthly residential building approvals had fallen to a level that, if maintained, would imply only around 115 000 commencements per year. Since then, the improvement in affordability from the significant fall in mortgage rates, as well as the boost in grants to first-home buyers, has seen a noticeable improvement in the outlook for dwelling construction. Surveys now show that households generally consider that it is a relatively good time to buy a home (Graph D1)…Bank liaison with builders indicates that high-rise developments remain constrained by the availability of finance…
The number of housing starts is likely to remain at levels well below most estimates of underlying demand. Lifting home-building in the longer-run will require further progress on the supply side, including addressing factors that are increasing the cost of development of new housing, both on the edges of cities and closer to the city centres.”
To quote the RBA Governor in testimony to Parliament two weeks ago:
Following questions from the Coalition’s Scott Morrison about whether Australia was in the grip of a house price bubble, Stevens responded, “I never used the word “bubble” [in his previous speech]…but I noticed it has been freely used by various other people who reported the speech.”
Stevens continued: “Relative to mean income, [Australian] dwelling prices have actually declined since about the end of 2003…I thought that showed that you could have an adjustment here in a way that was not really disruptive – unlike some of other adjustments that we are seeing in other countries.”
Morrison further queried, “Do you think it is fair to say that, whether it is the issue of taxes and charges or rising building costs, planning issues—whatever those issues are that largely relate to supply—instead of facing a housing bubble we are really faced with a housing bottleneck?”
Governor Stevens concurred: “I think what you have put your finger on here is really the point I was trying to make in the speech. I was not really trying to say, ‘Look, there’s a bubble,’ with implications that some people draw from that word being used. It is more that we need more dwellings”
3) ANZ Bank’s estimates of Australia’s housing shortage: over 200,000 homes
“If housing supply remains on its current trajectory, Australia will face a critical and potentially intractable shortage of housing that would force rents and house prices significantly higher”
“By mid-2010 that Australia will have an unprecedented underlying housing shortage of 250,000 dwellings!”
4) BIS Shrapnel estimates of Australia’s housing shortage: 160,000 homes
5) Westpac estimates of Australia’s housing shortage back in June 2008: 140,00 homes (add another 50,000 to this)
Comment by Lachlan on 24 August 2009:
Can any asset class triple in value every ten years indefinately without a correction? Even the spin doctors and bubble blowers have limitations.
Comment by Lachlan on 24 August 2009:
Though a correction could be simply a near stagnation of property prices for a period while our deficit spending mad governments produce increasing inflation in consumeables. Or will that further erode business conditions leading to a bigger crash?
Comment by Nils on 24 August 2009:
The shortage argument is flawed in so many ways. A while ago I saw (can't recall where) data on the number of dwellings built vs population increase since the 80's, and sure enough the rate of construction was higher than the rate of population growth. The key number is Household Formation, which is sensitive to the ups and downs of the economy.
Comment by prozak on 24 August 2009:
To be honest I would have preferred a bit more in-depth analysis on this. The counter-argument seems as light weight as the shortage argument based on this article.
Explore further the empty properties and look at this by metro regions & suburbs etc... also need to cross this with things like time on market for suburbs.
The shortage argument does not work anyway. UK & JAPAN are the two most overcrowded islands in the world and also had a dire shortage... the UK was supposed to be something like 200k properties per year.....
Didn't stop the bubble from bursting.
Only artificial asset price support by the BoE has so far stopped the UK from going further down.
Comment by prozak on 24 August 2009:
Dan,
Nice link.
Comment by Biker Pete, Baddeck, Cape Breton on 24 August 2009:
Complimented by your decision to not post effective counter-arguments. You guys must indeed be concerned about your position!~
Comment by Pep on 24 August 2009:
I respect Kris's opinions, but I feel he is missing several important points with regard to the resilience of residential property.
Firstly, as history is a great teacher and supposedly repeats, can any one ever remember our property market taking a dive in the proportions that some of the experts are predicting? I've only been in the market investing for 27 years but others I have spoken to, who have been in a lot longer can not remember a time when well located, residential property has taken a great hit. The reason is because houses in times of uncertainty becomes safe storages for money, like gold only better as houses produce income in the form of rent.
Secondly you have to look at vacancy rates figures. Can these be botched?
If no then there are some good examples of supply and demand to look at. Currently and for some time now vacancy rates have been low, so this means demand is high and therefore risk is low, therefore prices are held.
If the property market does tank as Kris is suggesting , you can bet that there will be many cashed up investors ready to pounce on some bargains when they do emerge and that prices probably won't stay low for very long.
Comment by Ange on 24 August 2009:
You're right - the REIA and their ilk are assuming that the 3/4 bedroom home with one family unit in it (make sure you include the dog or cat!) is the norm and therefore what policies should aim for. To include caravan parks, for instance, when some people are really content living in them rather than houses (because they are cheaper and have less upkeep for older people) is rather overstretching the point. And of course a lot of people can't afford that 3/4 bedroom home anyway, so renting a small flat is all they can do.
These guys just want to keep building stuff and generate jobs and sales, but they don't understand that the world has changed in recent years and over-consumerism is worse than under-consumerism.
Comment by Sean on 25 August 2009:
Nice work, Kris. While I agree with your logic and discovery of the disturbing NSC methodology (what were we spending our taxpayers dollars on?), I disagree with the last observation that housing unaffordability has been brought on by inappropriate government interventions. While certain tax breaks and handouts factor into the picture, I believe it is the finagling by the banks nationally and internationally, and their willingness to lend much more, that has lead to overly expensive housing, and is culminating in the GFC. I think most thinking people know to associate the CDOs and MBSs and all the other toxic Wall St stuff with the US housing market, along with banks not pricing risk into their interest rates. OK, you can say that's all the US Fed's and Greenspan's fault, and FMC and FNE and all the rest of it, but the market is just as much to blame for the excesses.
Comment by Cyber Cynic on 25 August 2009:
Nice find Dan. Very interesting data.
Brisbane seems like the best place on the East Coast to invest..... With only a slight surplus. Tassie looks good, but my money likes the warmer climates.
Comment by Dan on 25 August 2009:
I'd be very careful Cyber Cynic. The data series finished in 2006, I don't know how much water passed under the bridge since. From the bleatings on property sites I'd say there were a lot of scared people in QLD earlier this year.
I suspect it will prove to be a bit more complex than just supply. People will move to where the jobs are, so you need to include employment prospects in your analysis.
Another crucial factor is the average degree of leverage. If most new loans have been issued at LVRs of 95%, a tiny reduction by the banks of their LVRs (loan to valuation ratios) results in an enormous fall in the borrower's capacity to pay. For instance, assume a deposit of $50000. I will leave out stamp duty and closing costs for simplicity's sake, they do impact this analysis but don't really alter the fundamental priciples. If the bank requires a 5% deposit (LVR 95), then the maximum price you can pay with a $50000 deposit is $1000000, because that is the limit you can borrow. Changing the deposit requirement to 6% results in a maximum price of 833000 (roughly). 7%, 714000. A 2% change in deposit requirements results in $286000 being cut from the price a borrower can pay.
If you chart this function you will find it is exponential, approaching infinity at zero % deposit, so the higher the LVR the more exaggerated the change in purchase price. I'm afraid I don't have this information as I am not looking at investing, but if I was contemplating a purchase in Brisbane I would very much want to find out where on the curve the other new buyers are currently. Traditionally QLD has been rather more overleveraged than the rest of Australia, although the Gold Coast is probably the epicentre rather than Brisbane. If the average LVR of new buyers is very high, I would say any city potentially has a very long way to fall. What do they say - don't catch a falling knife? The knife looks more like it's still rising currently, at almost the very top of its parabola.
Comment by Dan on 25 August 2009:
By the way that wasn't me that gave your comment one star. A bit rude...
Let me know if you can be bothered researching LVRs in Brisbane? Good for academic interest and entertainment.
Probably a good idea to check price to rent ratios too, equivalent of P/E for stocks. Apologies if you're already very familiar with all of this.
Comment by rick e on 25 August 2009:
If negative gearing was to say you are only allowed one investment property to be negative geared and the rest apply a normal tax rate, then there would be more homes on the market and less rentals (no good for government who tax rent received by land lord) it appears there are fewer people with a lot of houses (instead of one to two homes per person) because government want it that way, to receive rent tax and keep property supply short so there is more demand. To keep economy growing
If this is so then Ken henrys tax review should still favor negative gearing
Yes I know people who need or want to live in area they could not afford might miss out as there would not be much rental around.
Comment by Richo on 25 August 2009:
It would be hard to do away with negative gearing as it is a key principle of business accounting. The interest costs on borrowing for capital invetment should be tax deductible.
If this was removed for private individuals, it would still exist for businesses, which would be a massive imbalance. Those people who have multiple rental properties would set up a business and move the assets in there.
It would create a lot of red tape, and only hurt the small investor.
If negative gearing was to be removed, it would be hard to justify taxing people on interest earned on savings.
Comment by Ned S on 25 August 2009:
The man says "As soon as the manipulation ends, price discovery will lead to a collapse in the housing market." What makes him think manipulation by government using tax payer money will end? It is quite possibily the single major driving force behind all investment markets nowadays. And we are likely to see way more of it rather than less. It is a huge factor to take into account in any investment decision.
Comment by David on 25 August 2009:
I found this paragraph in the Summary interesting:
Social housing declined from about 400,000 dwellings in 1996 to an estimated 390,000 in 2008. If social housing had maintained its share of total dwelling stock, there would be around 480,000 dwellings in 2008. This, too, has contributed to pressure on the private rental market, and to poor outcomes for lower income households.
480,000 - 390,000 = 90,000 shortfall in lower income housing that the government dropped the ball on.
Comment by Greg Atkinson on 25 August 2009:
Ned S I agree. The government also supports stock prices in the way the tax office treats franked dividends, encourages R&D via tax deductions and supports the car industry via handouts. The market is always being distorted by the actions of governments and the housing market is no exception. I think the fact is that it would be extremely risky for the government to start tweaking with negative gearing etc. at this point in time. Anyway I would guess that higher interest rates and the scaling back of the FHBG will cool things enough? We don't have to have a property bubble in Australia because the U.S. and U.K. did...it isn't a virus
Comment by David (Brisvegas) on 25 August 2009:
On the northside of Brisbane, we have a two paced real estate market. Houses in the outer fringes, say 20 to 25kms from the city are in abundant supply, and bargains are easy to find. If you don't need to travel to the CBD, this is where you will get good value for money at present and even better value for money when interest rates go up.
However, if you want to be within the 10km circle from the CBD, you will find an undersupply of quality renovated houses, and competition from others to get them. At one open house we went to, 64 groups went through on the first Saturday, with multiple offers being put in (all over $1M).
When times are uncertain, people look to invest in areas that they consider to be the most assured of maintaining and possibly growing the value of their investment. In respect of Brisbane real estate, it's the inner circle areas that continue to offer this security. I can not imagine a price crash in these areas for quality renovated homes. There are too many vested interests involved and most people in these areas aren't your first home buyers with minimal equity, so needing to sell will only occur if unemployment becomes the issue.
However, the outer areas are going to be a nightmare for homeowners, as more and more housing estates open up, targetting first and second home buyers.
Comment by simple dan on 25 August 2009:
Am i sounding silly but instead of including all the rich peoples empty holiday homes which might never enter the market, souldnt it make more sense to be analysing the total of properties either on the market or available for rent?
Comment by Unpopular Truth on 26 August 2009:
Property agents lying to better their chances at selling? What's next? Water being wet?
Comment by WinstonWolfe on 27 August 2009:
Plot the following ABS stats:
3101 table 1 Population Change
8750 table 2 Dwelling Commencements
Then divide cumulative popn change by cumulative dwelling commencements since 1981.
You'll get a dwelling being built for every 1.65 persons.
Considering the median household size is 2.6 persons, where's the undersupply?
And no, it isn't in demolishing of existing stock. This number is surprisingly small.
Comment by Greg Atkinson on 27 August 2009:
WinstonWolfe..how many of the new dwellings are 1 or 2 bedroom apartments? Isn't the capacity of the new dwellings what we really need to know?
Comment by Biker Pete, Wolfville, Canada on 27 August 2009:
You got it, BrisVegas!
Comment by Ross on 27 August 2009:
WinstonWolfe alongside Greg's question is the accounting required of the effect of divorce on dwelling capacity demand. Another factor is consolidation among immigrant families with some multi generational households in Macmansion land countervailing the empty nest residences that, when you go back 3 or more decades accommodated that pariah of the tax man, the boarder! All told however I think you are on the money even if you shouldn't discount the pump priming engaged by state govts of the slow release of land for development and the user pays fees.
Comment by Ned S on 27 August 2009:
Capacity of new dwellings Greg? Three quotes from the ABS link that follows them:
"Between 1986 and 2006, the number of private dwellings in Australia increased by 45%, while the number of people living in private dwellings increased by only 28%."
"Nationally, the average size of a new house has increased by 32.7% (181m2 in 1987-88 to 239m2 in 2007-08)." PS: 239m2 is a very spacious house people!
"An indication from the Census of the increase in the size of homes is the growing proportion of dwellings with four or more bedrooms. Nationally, from 1986 to 2006, dwellings with 4 or more bedrooms increased from 15% to 28% of all private dwellings."
http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/1308.8Feature%20Article1Aug%202009?opendocument&tabname=Summary&prodno=1308.8&issue=Aug%202009&num=&view=
My main post wouldn't go through - Too long maybe? Perhaps it'll pop up later. But either way it doesn't support any housing shortage argument. Not that that means government at all levels and the RBA and the banks and the building and allied industries are keen to see anyone get cheapy houses (despite any nonsense rhetoric to the contrary) - They are actually extremely proactive in ensuring it doesn't happen.
Comment by Greg Atkinson on 27 August 2009:
Ross you are spot on about the way land is managed/released by state governments and the way they cream money off the top by hitting developers with all sorts of levies etc. If there was any long term vision in NSW for example a high speed rail link would be built to Canberra and townships could be established along the route. A person could then easily live 80-100km out of Sydney and still commute to Sydney in a reasonable amount of time. Okay, sorry I am dreaming again
Comment by Ned S on 27 August 2009:
The parties involved could "solve the problem" in many different ways - But they don't want to - Because to them it isn't a problem - Rather it is a crucial part of the economy. Do your civic duty and sign here to make your 30 year commitment to supporting the banks and the government and the economy generally please ... And government will do it's part over time by devaluing the purchasing power of your fiat currency to lower the real value of your mortage debt.
Comment by Rob C on 27 August 2009:
How can there be a "chronic housing shortage", when there are many thousands of houses for sale ?
If you want to buy a house, just do it.
Comment by Righty on 29 August 2009:
8,426,559 dwellings total-830,376 Vacant - in every street that would mean there are 1 in 10 houses empty. In your area is every 10th house empty? All these experts in property, yet they seem only to be able to make money with their opinion (pro or con) not their ability to buy and sell property.
Statistics can be made to say any truth you want to read. With all due respect to the author, people who look at shares and property as a similar investment never seem to make it in property. It's a bit like comparing a car to a hair brush, they are completely separate in their purpose and have nothing in common.
*as a footnote I don't invest in shares (each to their own) my wealth (real wealth, where I could stop working and still pay every bill unhindered in my lifestyle) increased by about 27% over the last 14 months. All of it property income. But statistically the property market has been terrible!!
Comment by Michael on 30 August 2009:
What Cyber Cynic has said about inner city property is right on the money. I believe it is at the core of house price rises as well. Inner city property is always in demand and in short supply. Our lives get busier and we dont want to travel so much. this is where I believe a second phenomenon kicks in where people in the next suburb price their dwelling relative to the most expensive inner city suburb. This happens all the way out from the inner city. Similiar situation for the coastline
So the law of supply and demand for property also needs a second consideration and that is proximity. think about it, if you could travel through wormholes/portals and get anywhere instantly property prices would correct much faster than and supply/demand effect as rural property where you cant see your neighbours would be valued more than any tiny block in the city where you are crowded in on all sides.
Comment by Bargeass on 13 September 2009:
The only shortage is property that is not artificially overvalued as a result of a naive socialist nanny state diversion of taxes to encourage the poorest, most naive members of society to over committ financially. And you can be sure the labor government knows these are the easiest people to con because most of them voted ALP.
Comment by Bargeass on 20 September 2009:
With @ 2 bedrooms for every member of the population it's hard to see how some can be deluded into thinking there's a shortage of housing.
Comment by John Salamon on 26 October 2009:
Hoooo Raaa! If you were here right now I could kiss you! This is the common sense all prospective first home owners should read in order to understand the lie the real estate industry and associated hangers on are perpetuating.
Those of us that are smart will wait on the sidelines, 'patiently' until the time the government can no longer manipulate the housing market and all the 'greedy' real estate investors finally get caught 'skinny dipping' when the tide eventually goes out. Good on ya Cobba!
Comment by Andrew Smith on 12 November 2009:
Could not agree more .... as significant as property spruiking is, what else are Australians not being told by our media, whoops "medium", with their advertisers, PR agencies, lobby groups etc.
Another example recently were the bogus population figures bandied round in media based upon highest historical rate and population peak ever, then extrapolated for 40 years at same highest ever rate.... 35 million by 2050 .... the Population Reference Group using same ABS stats came up with 28 million?
Assume the property spruikers were involved again in pushing rapid population growth to media.... implying if you do not get into the market now..... you will miss out.... and old "white Australia" protagonists could argue that migration should cease.....
Nor is it explained that Working Holiday Visa makers, 457 temporary workers and international students are included (difficult to tell if 1,000,000 Australian permanent residents and citizens living abroad were included?).
Something else media and property spruikers do not tell you, the aforementioned visitors are dropping in numbers (in some major markets off a cliff), and processing of independent skilled migration has ceased for up to two years, as announced 23 September .... but media and property spruikers obviously did not see that one....
At a guess, that would be a drop of 100,000?