Land shortages behind housing boom, argues CIS
The root cause of rising property prices is a lack of available land for development, according to the Centre for Independent Studies. A report released by CIS this week shows new land supply has fallen by 21 per cent across Australia’s five largest capital cities in the past decade. At the same time land prices have risen by 148 per cent, to $504 per square metre. The report absolves investors – foreign and domestic – of their culpability in pushing values beyond affordability, laying the blame on zoning decision-makers. CIS is a libertarian think tank, so its remedy should come as no surprise: liberalise land development policies to allow for more density. “Land supply and the intensity of land use need to be freed-up to accommodate rising demand.” Read the full story here.
Rebel real estate agents in REA row reeling under regulatory review
The Australian Competition & Consumer Commission may launch a full-scale competition investigation into a group of real estate agents fighting price increases at REA Group’s listing site, as connections between the group and REA’s prime competitor emerge. The brokers who have defected from REA have united under the banner of a new group called Real Estate Digital Marketing Services. REDMS appointed a media buyer to allow the group to negotiate advertising rates collectively with REA Group. But REDMS negotiator Vizeum has the listing service Domain – number two in the market – as a client, and some of the leadership of REDMS is connected to Domain as well. REA has repeatedly asked REDMS to clarify its corporate structure, and REDMS has repeatedly refused. The ACCC may decide that the rebel agents may be breaking competition law as a result.Read the full story here.
Rental prices falling in Canberra and Perth, threatening yield
Australian Property Monitors new rental price report shows rental values for houses down 6.6 per cent for the quarter in Perth and 6.3 per cent in Canberra. Weekly house rent in Canberra has fallen to an average of about $450 a week. Units have fallen 6.1 per cent to $385, the largest drop for unit rental prices in Australia this quarter and the lowest median rental price of the capitals. Sydney unit rents hit $500 per week this quarter, up 5.3 per cent over the past year. But it’s increased rental supply – and not job losses – that has driven down prices in Canberra. Read the full story here.
The housing boom is making investors very happy
The latest Property Council/ANZ property industry confidence index reports steady – and very strong – confidence among property investors at 131 points, compared with 132 for the previous quarter. In NSW, it’s 143. (A rating of 100 is neutral.) And the Westpac/Melbourne Institute index of consumer confidence is up by 1.9 per cent to 94.9 points in July. Property investors feel confident that the economic outlook for the real estate market remains strong, buoyed by low interest rates, low default rates and a relatively strong job market, along with strong macroeconomic trends in the global marketplace. It helps that some weakness in China may actually make Australia a more attractive place for property investors, boosting values here. Read the full story here.
Negative gearing was meant to spur new home construction – it didn’t work
Callam Pickering argues that if negative gearing’s original policy purpose was to boost the housing supply by encouraging greater investment into housing construction, it’s failed and “an unmitigated disaster". Investors have preferred to use negative gearing as a speculative tool for the purchase of existing housing, while new construction accounts for only 7.1 per cent of the total value of investor loan approvals. The majority of Australia’s two million property investors use negative gearing, generating $6.8 billion in net rental losses … and tax losses for the Australian government. Read the full story here.