Coalition launches another fake housing affordability inquiry

Here we go again. A new federal inquiry into ‘housing supply problems’ will be launched by the Morrison Government to examine the contribution of property taxes and restrictive planning and zoning regulations [my emphasis]

Treasurer Josh Frydenberg has approved a parliamentary committee inquiry into housing supply to be led by Liberal MP Jason Falinski, chairman of the House standing committee on tax and revenue…

Mr Falinksi said it was too easy to blame negative gearing and low interest rates for rising house prices when a lack of supply caused by over-regulation was the fundamental problem…

“In my view, this represents an urgent moral call for action by governments of all levels to restore the Australian dream for this generation and the ones that follow,” Mr Falinski said…

Restrictive regulations were a leading reason for the supply of new housing failing to keep pace with demand from high population growth and strong immigration levels before the pandemic…

Clearly, this inquiry is being driven by the Coalition’s property developer mates.

Any housing shortage pre-COVID was unambiguously caused by the federal government throwing open the immigration floodgates in 2005:

Australia's net overseas migration

Australia’s immigration intake accelerated after 2005.

Australia’s net overseas migration (NOM) jumped from an average of 89,000 between 1991 and 2004 to an average of 215,000 between 2005 and 2020 – an annual average increase in immigration of 140%.

But now that immigration has collapsed, Australia’s ‘housing shortage’ has miraculously disappeared:

Australian dwelling construction

Big dwelling oversupply in the pipeline.

Thus, the first best solution to Australia’s housing supply problem is not to return immigration back to its pre-COVID turbo-charged level.

Regardless, Australia’s developers are sitting on a mountain of zoned residential land, totaling a decade-plus of supply:

Zoned residential land

Developers are sitting on masses of zoned land.

Therefore, it is hard to take the government’s supply claims seriously in light of the above evidence.

Sadly, our political leaders don’t care about these truths. After stimulating the construction of thousands of extra homes through HomeBuilder, the federal government has already stated that it will return to importing hundreds of thousands of migrants to fill them as soon as the pandemic subsides. This is how Australia’s Ponzi economy works, after all.

Australia is the housing equivalent of a narco state. And our governments dance to the tune of their property lobby paymasters.

Unconventional Economist

Comments

  1. Leith what you say is true.

    If the govt was serious about restoring housing affordability it could ramp up the creation of new cities, roads, rails, dams, hospitals, schools, etc

    AND

    remove restrictions on housing supply.

    THEN

    We could have 200,000 immigrants coming per year, and have 500,000 extra decent houses built per year until abundance was being dispute. It would not be great for the natural environment. It would spew CO2 and would not be particularly sustainable. But it would provide affordable housing like existed pre-1970.

  2. Sounds like this inquiry isn’t needed. Mr Falinski has already identified the cause.

    • Yeah but, you also need a highly-paid economist, who completely by coincidence, verifies the cause already identified by the politicians. Here, our thoughts first turn to ex-RBA honcho Peter Tulip, famous for determining that Sydney and Melbourne house prices were about “zoning restrictions” rather than mass migration or land hoarding.

  3. I suspect that Liberal party cronies (i.e. developers) want to take the last remaining decent housing in our cities and turn it into dogboxes for immigrants and battlers, so that cronies can make a lot of easy money.

    I suspect they will identify planning restrictions as the cause of the housing disaster and then suggest smart growth is the solution – turning middle ring houses into medium and high density housing developments (sans infrastructure).