REWARD: $60 billion, for any developer or builder who can find them.
These are the 190,000 households that, according to the construction industry, are desperately seeking new homes but can’t get them.
I’ve been looking for them, but can’t find them.
I know many builders have been having the same problem. I’m beginning to think they don’t exist.
The Housing Industry Association keeps telling us we have a chronic housing shortage, with a shortfall of 190,000 homes. Personally, I think this is fiction — something the HIA is so good at it’s in line for a Pulitzer Prize.
Its finest work of fiction is the Affordability Index, which claims the average first-home buyer in Australia pays $535,000 for the typical first home.
If you’re looking for a copy of this publication, you’re likely to find it in libraries in the “fantasy” section, because the ABS tells us that the average first-home buyer in Australia borrows $292,000.
The report that claims unsatisfied demand for 190,000 new homes should be found in the “science fiction” section, alongside books that depict time travel and interaction with aliens from worlds a thousand light years from earth.
The HIA has written a publication that looks deep into the future, foreseeing a 466,000 shortfall in 2020. George Orwell’s 1984 was a nursery rhyme compared to this.
The odd thing about this persistent complaint that we’re not building enough houses is that the loudest whingers are the people whose job it is to build houses.
There are large tracts of zoned residential land in our cities (owned by major developers) waiting for houses to be built on them.
If we’ve got a 190,000 shortfall, why aren’t they frantically building?
If the HIA figures were true, we’d have tens of thousands of families living in tents or under bridges.
I’ve visited most of our state and territory capitals this year, but I haven’t seen any of these desperately homeless.
I’ve taken a look at city vacancy rates, expecting them to be zero everywhere.
That would be a reasonable expectation, if supply had fallen so far behind demand.
But, according to RP Data, all our cities have vacancies above 3 per cent, except Canberra and Adelaide.
The South Australian capital has a vacancy rate of 2.9 per cent, which leaves Canberra as the only capital city with tight supply (a vacancy rate of 1.7 per cent).
Melbourne and Brisbane have vacancies above 5 per cent, Perth is 4.2 per cent and the average across the eight capital cities is 4.1 per cent.
We’re talking true vacancies here, not the “lies, damned lies and statistics” published by the real estate institutes.
This explains why rental growth has been so subdued.
Figures from Australian Property Monitors suggest Melbourne, Brisbane, Perth and Hobart all had less than 3 per cent growth in median house rentals in the year ending June.
Sydney and Adelaide rents grew little more than 4 per cent.
Darwin and Canberra were the standout performers with rental growth of about 8 per cent.
Apart from Darwin (up 12.5 per cent), none of the capital cities managed 5 per cent growth in apartment rentals.
In the June quarter, four of the eight capital cities had a decline in rentals, according to the APM Rental Report.
Something doesn’t add up here.
If we really did have a chronic housing shortage, rents would be going through the roof.
Clearly, they are not.
Seasoned property market analyst Michael Matusik (of Matusik Property Insights) says we are actually heading into oversupply.
He says those who cry “undersupply” are miscalculating the impact of recent population growth.
Much of the nation’s population growth has come from overseas migrants, most of whom are “family reunion” migrants, students attending our universities or business people on temporary visas.
They don’t generate significant demand for new housing.
Matusik further argues that our households are starting to increase in size again, partly as a result of the migrant factor.
When you factor these matters into the supply-demand equation, he says, we’re actually over-building.
This runs contrary to the incessant campaigning of the developer lobby, whose members have motives that prevent them from giving the public accurate information.
Matusik says: “Disbelieve anyone whose sales pitch is based around how much the market is under-supplied.”
All of this is sober reading for property investors.
My interactions with property consumers suggest many are keen to exploit the much-publicised shortage by buying rental property with prospects of strong growth. They need to check the non-fiction sections of their local library.
They won’t find any publications there authored by the HIA, Master Builders Association, Urban Development Institute of Australia and Property Council of Australia.