Housing shortage crisis an enduring myth: Terry Ryder

Friday last week encapsulated all that’s wrong in the reporting of real estate in Australia. “Rental prices continue to soar” screamed one headline, while “Rental prices in Australia are going backwards” shouted another. 

How did different media outlets come to such different conclusions? One published the press release on The Domain Rental Report and the other published the handout from the CoreLogic Rental Index. 

As is so often the case, the statistics from one research source are different from those on the same subject from a competing source. Newspapers and other forms of media report each in isolation, often running the press release pretty much verbatim, without applying any journalistic oversight. 

No one looks at the material on the one subject from all sources and analyses it to make some sense of it for readers. 

Sometimes the numbers from two different sources aren’t that different. It’s just that one research entity will choose to place a negative slant on the figures and media will go with that, while another researcher will emphasise the positive.

The lack of genuine journalism on these matters is quite alarming. The content and tone of the press release is re-cycled to the public as news.

The result is confusion and misinformation, the curse of real estate consumers trying to figure out what’s really going on and make good decisions on investment.

So what can we make of the national rental data published by two major sources on the same day recently?

The reality is that they’re not actually so different. One chose to take a negative stance and the other decided to paint a brighter picture.

Here’s where Domain agrees with CoreLogic:

• Both see rents going seriously backwards in Darwin. The annual decline in rents is in double digits, according to both sources.
• Rents in Perth are still falling, though not as much as in Darwin, according to both.
• Both sources see only moderate growth in rents in Sydney.
• Both sources see minor growth in Melbourne, around 2-3 percent in annual terms.

And here’s where they don’t agree.

• Domain records 2-3 percent growth in Brisbane, but CoreLogic reports a marginal fall.
• Domain sees minor growth in Adelaide, but CoreLogic has rents down 1 percent annually.
• CoreLogic reports essentially no change in Hobart, but Domain reports a 6 percent annual rise in house rents and a 2 percent rise in apartment rents.
• CoreLogic records a 1.2 percent rise in its Canberra Rental Index but Domain sees bigger increases in rents in the capital.

It basically comes down to this: while there are a number of similarities, Domain’s figures overall are more positive than CoreLogic’s and it chose to take an optimistic outlet.

“Rents in most capital cities continue to rise, with falling vacancy rates indicating an ongoing shortage of rental properties,” said Domain chief economist Andrew Wilson.

“Despite the recent influx of home building, we can expect to see upward pressure on both houses and unit rents in most capital cities continuing in the foreseeable future.” 

But the CoreLogic analysis said the “annual capital city rental change is in decline and is now the lowest since 1996”.

My take on all this, having observed the quarterly rental data coming from all the usual suspects over the past 2-3 years, is that capital city rental growth has been consistently low over that period. While there are occasional exceptions, the capital cities have failed to deliver strong growth in rentals for years – and, in the case of Perth and Darwin, rents have dropped substantially.

Domain has chosen to be upbeat on its latest figures, but really they show very little in the way of strong, meaningful growth in rents.

It provides further evidence that the “housing shortage crisis” consistently claimed by the developer lobby is another of real estate’s enduring myths.

Terry Ryder is the founder of hotspotting.com.au. You can email him or follow him on Twitter.