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Brisbane's housing unaffordability crisis spun by ABC to promote property lobby interests

Almost invariably reporting of Australia's acute housing unaffordability crisis does not inform the public of its causes, nor help it to arrive at a solution. The ABC's report No relief in sight for Brisbane's renters of 20 June 08 is no exception.

See also: Rent gouging threatens Brisbane inner city retail community of 8 Mar 08

Yet another article, this time on the ABC's online news service, No relief in sight for Brisbane's renters of 20 June 08 provides yet further confirmation that the polices promoting rapid population growth by all levels of government in Brisbane - local, state and federal - are recklessly harmful to many of Brisbane's existing inhabitants.

However, this obvious link is ignored by the article, and, in spite of its promising headline, the article, instead, turns out to be nothing more than another serving of propaganda in the service of the very people who caused the problem in the first place, namely the growth lobby consisting of property developers, land speculators, lenders, construction companies and others who profit from population growth at the expense of the rest of the community.

Property speculators lobby for higher immigration

Record and escalating property values and the consequent high rents is precisely the intended effect hoped for by the property interests who have been lobbying for population growth behind the backs of the Australian public for decades. Indeed, this hope was openly expressed by an economist working, as I recall for the Real Estate Institute of Australia in 2004 on Radio National's Australia Talks Back program on 19 May 2004 (it is now called just Australia Talks). The topic of the day was the supposed ‘problem’ of a short-lived slump in housing prices, which caused land speculators momentarily not to be able to reap the normally high profits to which they had become accustomed . Several times, the REIQ economist stated that when immigration picks up, the woes of property investors would end.

At the time, I strongly doubted claims that high immigration was, in any way, in the interests of the current residents of this country. In the past I had naïvely accepted the view that the immigration program was undertaken for altruistic reasons, even if I believed them to misguided. Whilst I was becoming more skeptical about this over time, the open acknowledgement of sectional self-interest behind our immigration program was still a surprise to me. I did phone in and speak on Australia Talks Back to make the point that housing prices, even at the supposedly depressed levels, were still impossibly high on a remotely normal income, but I had not sorted out my thoughts on that other question sufficiently as to be able to speak to it coherently. Two days letter at mid-day on Friday 21 May, I sent a letter, in the hope that it would be read out during Friday's "Week In review" program. However that was a week in which an "Australia Talks Books" was scheduled on Friday instead, so it was not read out. The letter was:

Dear Sandy McCutcheon et al,

Firstly thank you for giving me a say on your show on Wednesday.

However, I forgot to comment on what one of your invited guests said, which I thought to be extraordinary and revealing.

He expressed his hope that further immigration will help the property market to 'recover', that is, presumably, that the crowding of further new arrivals into Sydney and Melbourne, will drive the already hyper-inflated housing prices even higher.

This confirmed my suspicion that the motivations of many advocates of immigration were not as altruistic as they had once led me to believe.

Those on the lower rungs of our society were not informed or consulted about the consequences of such an increase in our population, and so now they can no longer afford what was affordable to them a generation ago.

As a matter of urgency, the process of decentralising our economy needs to be commenced, so that everyone can once again find somewhere affordable to live and to work, and before we increase our population levels even further, there needs to be a full and open discussion.

Yours Sincerely

,

James Sinnamon

Housing hyper-inflation the direct consequence of the property lobby's successful lobbying efforts

Subsequently, land speculators and property developers got their wish. John Howard, the man who told the Australian public during the Tampa crisis of 2001, "We will decide who comes to this country, and the circumstances under which they come," secretly ramped up Australia's immigration ever higher and, as a consequence, Australia has some of the least affordable housing in the world. Many, who could previously have hoped to take out a mortgage for a house if they made sacrifices, have been completely priced out of the market as a result, and have no choice but to rent.

Renters at the mercy of ruthless landlords and real estate agents

As the numbers of those seeking rental accommodation have greatly exceeded available rental stock, many tenants are now at the mercy of unconscionable landlords and real estate agents. In 2006, I witnessed the life of a neighbour destroyed during a six month period, as real estate agents and prospective buyers marched into her rented half-house almost at will. On one occasion, whilst the tenant was out, damp washing left hanging, which was considered an obstruction, was dumped on the ground. Eventually the house was sold and the new owners raised the rent beyond what the existing tenant could afford, so she had to move out.

More recently, another rental house occupied by a friend was put on the market. When my friend insisted upon being given adequate written notice by the estate agent before his floor of a two story house was inspected, the estate agent attempted to bully him over the phone. He, nevertheless, stood up to him, asserting his legal rights as a tenant. Fortunately, the landlord was more ethical than most and apologised profusely when he heard of this. The house was eventually taken off the market, and he was allowed to stay. Most tenants, of course, are not so lucky. The Courier Mail newspaper reported (will endeavour to obtain reference) in about two months ago that some Brisbane landlords are evicting their tenants without cause in order to replace them with other tenants able to pay higher rents.

Many who no longer can afford their own unit, let alone a free-standing home, now have no alternative but to share a roof with often incompatible strangers. Those who can't even afford that are resorting to living in cars or in tents in open spaces around the city. One prominent collection of tent dwellings is now to be found beneath the Story Bridge.

Small businesses are also paying the price. As reported in the story Rent gouging threatens Brisbane inner city retail community of 8 Mar 08 sudden exorbitant rent increases imposed by landlords, with the active encouragement of a local real estate agent, destroyed the economic viability of a number business in a formerly cohesive retail community the inner-city suburb of Paddington.

How housing unaffordability scandal is spun to suit the purposes of land speculators

Now, almost invariably, whenever housing unaffordability is raised in the printed media, radio and television, the ‘experts’ whose views are sought are invariably the exact same people who brought about this this human tragedy in the first place. They now would have the public believe that they are all working with single-minded determination to bring housing affordability back to the Australian masses once again. This line is accepted unquestioningly be almost all the newsmedia and the supposedly independent ABC is no exception.

In this story, the ‘experts’ consulted included:

  • an unnamed spokesperson from economic forecaster BIS Shrapnel,
  • Steve Greenwood, executive director of the Property Council of Australia,
  • Dan Molloy, the managing director of the Real Estate Institute of Queensland,
  • the pro-developer pro-population-growth Lord Mayor of Brisbane Campbell Newman,

In spite of the fact that the ‘solution’ proffered by these people is hotly controversial in South East Queensland, including on the Sunshine Coast and in Redland City, where anti-development councils have been elected, no critical views were reported in the article. The closest thing to a critical view was from Councillor David Hinchliffe, who, as former Labor majority leader on the Brisbane City Council, notoriously surrendered to Campbell Newman on nearly every key policy question, with disastrous results for Labor, during the March 2008 Brisbane City Council elections.

Economic forecaster BIS Shrapnel tipped that house prices in south-east Queensland were likely to rise by 22 per cent over the next three years. The obvious fact that this was almost certainly the result of the Federal Immigration minister Chris Evans having announced that the annual immigration intake was to be increased to 300,000 on 14 May was, of course, not mentioned.

Another contributing factor was Lord Mayor Campbell Newman's sudden hike in council rates directly counter to a clear commitment he made prior to the election of 15 March.

Naturally the whole discussion was couched in terms of what or would not entice investors to invest in rental property.

Campbell Newman and Steve Greenwood differed over the effect that his rate increases would have, with Newman absurdly insisting that his rate increases would have no significant impact upon rents.

Steve Greenwood naturally supported the federal rent-assistance scheme which does nothing but fuel housing inflation at the expense of taxpayers.

Greenwood claimed, as the Property Council invariably states in these sorts of stories, that the solution to housing affordability lies with the release of more land for housing development. In his words:

"But we need other things done, and those other things are increasing land supply.

"At the moment we have a regional plan that is being reviewed."

Mr Greenwood says land will need to be unlocked across the south-east to boost supply sufficiently and take pressure off the housing market.

In one sense Steve Greenwood could be right, to a point.

It is hard to imagine how the supply of more land would not make it cheaper, even if we take into account the extravagant developer's margins and the way that developers, themselves, notoriously withhold the release to homebuyers of land sold wholesale to them by governments in order to maximise their own profits.

If all other things remained equal, we could still expect the affordability of housing to marginally improve. Of course, this ignores the fact that the housing on offer is likely to be distantly removed from any worthwhile amenities, public transport or employment opportunities.

But, of course, all things are not going to remain the same as the greater demand caused by increasing immigration will almost certainly more than wipe out any marginal improvements.

Furthermore, most existing residents strongly object to the loss of open spaces, bushland and agricultural land that will be entailed in the release of new land for housing. As well as degrading the quality of life for existing residents the fragile ecology of the region could be destroyed and, with that any prospect of local food self-sufficiency, vitally necessary when the effects of ever higher fuel costs are inevitably to be felt.

It is for such reasons that the Redland City Council and the Sunshine Coast Regional Council are opposing the Queensland Government's release of more land. In response, Steve Greenwood complained:

"Just outside of Brisbane we've got a number of claims coming from some of the local government areas that actually want to cap their population growth.

"That is very alarming, because basically what they're saying is they're going to … attempt to further limit supply, and for most of us who have even a basic understanding of economics, you limit supply and your costs go up.

Of course, the abovementioned efforts made by the Federal and State governments on behalf of the Property Council of Australia and the REIQ to increase demand are not to be even considered.

Comments

Chairman Rudd’s Secret Weapon

Much has been written about the effect of the Budget on inflation. The general consensus of opinion seems to be that if the ALP were going to honour their election promises, the Budget would be more or less neutral. However the Government and the Reserve Bank are clearly worried about inflation in view of the rise in commodity prices, which are determined overseas.


Where are all the immigrants to live? Housing starts have fallen, rental accommodation vacancy is at the lowest in living history. Desperate seekers are bribing estate agents. In the middle of all this we have touching features about Chairman Rudd cuddling up to the homeless. Concern is no substitute for action.

They fear that there will be a wage breakout, forcing up prices, especially since they are repealing WorkChoices and relaxing pressure on the unemployed to get a job.

Their solution is to flood the country with a record number of immigrants (up nearly 40,000 to nearly 200,000) and temporary work visas, increasing the competition for jobs, forcing up unemployment and hence deterring workers from seeking higher wages. The Budget papers allow for an increase in unemployment and for a decrease in the wage share of GDP from 47.9% to 45.9%.

The media in general has not drawn attention to the significance of the policy, but there has been strong approbation from big business. A few unionists on the Left have expressed alarm. Most of them are silent, supporting the party ahead of the best interests of their members.

The social effects are of no concern to Chairman Rudd, headline interest rises are his major worry. Where are all the immigrants to live? Housing starts have fallen, rental accommodation vacancy is at the lowest in living history. Desperate seekers are bribing estate agents. In the middle of all this we have touching features about Chairman Rudd cuddling up to the homeless. Concern is no substitute for action. The main reason for homelessness is lack of accommodation for them at anything resembling affordability. Older houses in around the city that used to provide rooms for the homeless are being pulled down for blocks of units to house all the newcomers.

The Infrastructure Fund will allegedly help with the transport and other bottlenecks that Australia is experiencing. But it won’t start spending for a year or so and capital works like these take time to implement. In the meantime ordinary Australians will have to put up with crowded public transport choked roads and clogged health services.

Now is the time to buy a rental property. With housing starts in decline and record immigration, rental rates must go up further. Tough on long standing Australians who can’t afford a house, but when did the ALP ever care about them? Uppermost in the minds of ALP long term planning is that immigrants tend to favour the ALP.

www.theindependentaustralian.com.au