royal commision inquiry into property??

Federal politicians busily mounting inquiries into various issues including coal-seam gas and the media might want to consider a royal commission into the alleged housing shortage.
Terms of reference should include examination of the bodies that represents builders and developers. It should also consider making misinformation a crime punishable by deportation to a godforsaken colony, like England.
I’ve already held my own inquiry and found that the property market is guilty of the crime of defying the laws of nature.
This is clear because we have two mutually exclusive events happening.
On the one hand, we have “a chronic housing shortage crisis”.
On the other, we have prices and rents falling.
I paid enough attention during high-school economics classes to know that this does not compute.
It’s an immutable law of nature that when you have a chronic shortage of something for which there is high demand, prices rise.
It is a fact, confirmed by data from all the major research sources, including the Australian Bureau of Statistics, that house prices in our capital cities are, in general, stagnating or falling.
It is also a fact, confirmed by recent figures from both the Real Estate Institute of Australia and Australian Property Monitors, that residential rentals are not rocketing.
In the June quarter, according to the REIA, Sydney, Melbourne, Brisbane, Adelaide, Perth, Canberra and Hobart all failed to deliver any growth in house rentals.
Apartment rents fell in four of the eight capital cities and flat-lined in two others.
Over the past 12 months, APM data shows, rental growth for both apartments and houses has been negligible or zero in most capital cities (Hobart, curiously, has done best, with a 6 per cent rise for houses, a 4 per cent rise for units).
This puts the focus on the other part of the equation producing an incomprehensible answer: the bit about a housing shortage.
Unlike the data on prices and rents, the shortage is not a fact — it’s a claim.
The claim is made by certain sources on an almost daily basis, but it remains a claim only.
On September 16, three different bodies that represent builders and developers pumped out press releases. This was not a coincidence. Nor was it pure chance that each said pretty much the same thing: we have a chronic housing shortage crisis and government needs to do something.
As has been the case, every other time the same bodies have made the same claims over the past three or more years, the press releases gave no suggestions about what the industry itself plans to do to address the alleged shortage.
It’s reasonable to expect them to do something because that’s their job: building dwellings. If there’s a massive shortage and unsatisfied demand, build some houses.
The thing is: if prices and rents are falling or stagnating or both, it suggests the opposite. It suggests we have a surplus or, at best, a balanced market.
Let’s look at what happens in areas where there really is a shortage. In Port Hedland, supply of residential accommodation has never matched demand created by the iron ore industry.
There is such an imbalance between supply and demand that typical houses cost more than $1 million. Price increases have averaged 26 per cent a year over the past 10 years. In the past 12 months, despite already astronomical prices, they’ve risen another 20 per cent.
Can you see the key point here? Even though prices are incredibly high — and some would say totally unaffordable — houses keep selling and prices keep rising because there is high demand and short supply.
In Gladstone, the influx of workers for the first of the $100 billion in industrial projects is creating massive demand for rentals in an under-supplied market.
There are reports of rents doubling and houses selling the same day they’re listed.
Builders are busy but the workers are arriving faster than they can build new dwellings.
Let’s look at what happens when we have the opposite situation of supply exceeding demand.
On the Gold Coast, which has a surplus of everything from warehouses and offices to apartments and house-and-land packages, prices have shown negligible growth for the past four to five years. In some suburbs, prices have fallen.
Many who bought apartments off the plan five years ago find they are today worth considerably less than they paid. In Surfers Paradise, the median price is less today than it was in 2006.
It’s the same at Noosa on the Sunshine Coast.
Developers have built dwellings for which there is little demand.
There is no shortage of dwellings to buy in our major cities.
Nationally, there are more homes for sale right now than at any time in the past two years, but few buyers.
In Melbourne, you have go back more than three years to find the last time there were so many properties available for purchase.
The REIA has just published the latest vacancy rates and Melbourne, Brisbane, Perth, Hobart and Darwin all have vacancies ranging from 2 per cent to 3.5 per cent.
If we have a dwelling shortage measured in the hundreds of thousands, as developers claim, vacancies would be near zero everywhere.
So let’s have a royal commission to put an end to these spurious claims — and punish the misinformation offenders.


http://www.australian-real-estate.net.au/investing/2011/09/24/no-australian-housing-shortage-property-prices-falling-and-rents-falling-abs-reia/