NSW Premier Gladys Berejiklian's housing affordability platitudes

There are many wonderful quotes on the subject of truth and lots of them are relevant to Australian real estate issues.

Mark Twain said “A lie can travel half way around the world while the truth is putting on its shoes” while Winston Churchill is credited with saying “Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened”.

Benjamin Disraeli gave us “There are three types of lies -- lies, damn lies, and statistics”, a reality which is seen every day in the press release-based coverage of Australian real estate.

But the one that’s most relevant to real estate today is this one from Nazi propagandist Joseph Goebbels: “If you tell a lie big enough and keep repeating it, people will eventually come to believe it.”

We see this revealed in the many surveys conducted on real estate issues. In simple terms, the prevailing view is the one most often reported in mainstream media, the truth notwithstanding.

So if media keeps stating a “national affordability crisis” as a fact, as it does daily, it’s no surprise when a survey reveals that most respondents are very concerned that young Australians are priced out of real estate ownership – everywhere in Australia, apparently.

Nor was it surprising when another recent survey found that foreign investors are the most popular culprits blamed for rising house prices in Australia. 

This results largely from a cynical exercise by federal politicians taken direct from a script of the iconic UK sitcom Yes Minister. If you want to show concern for an issue but plan to change nothing, here’s what you do: hold an inquiry, string it out as long as you can and, at the end of it, find an unpopular minority to blame for the problem – and then recommend holding another, more in-depth, inquiry.

That’s pretty much the scenario that’s played out in Canberra over the past 2-3 years. A long inquiry ended by blaming all the problems on dastardly foreign investors. Brilliant, because greedy foreigners are easy to dislike and they don’t vote in Australian elections.

So, while bringing on a second inquiry (the one that recently concluded by making no recommendations), the Federal Government indulged lots of wonderful sabre rattling and passionate speeches about clamping down on foreigners who break the rules, thereby creating a level playing field for young Aussie hopefuls.

There were a few highly-publicized instances of foreign buyers being forced to sell back mansions they’d bought in breach of the foreign investment rules. There you go, Australia, problem solved.

But you’ll notice that prices have continued to rise in our biggest cities. All the fluff and nonsense, all those press statements and acres of newsprint - and not a single house is cheaper in Sydney or Melbourne.

Why is it so? Because foreign investors have little or nothing to do with the cost of homes out there in the burbs where first-home buyers hunt. They’re a tiny percentage of the overall market and they mostly target high-end houses in the big cities or off-the-plan apartments. They’re not scouring Blacktown or Caboolture or Cranbourne seeking to outbid Aussie first-home buyers.

But 35 percent of respondents to a RateCity survey believed that the single biggest reason for high house prices was foreign investors. Why? Because media reports keep telling them so and your average punter doesn’t waste a lot of time on independent thought.

The next most popular culprits in the survey, Australian investors, are also unfairly maligned as the cause of real estate prices rising everywhere.

And, once again, the two worst offenders get off scot free, because media never talks about them.

The buying sector that most drives prices is the mob known as next-time buyers – home buyers other than first-time buyers. Most of the time they’re the biggest individual buying cohort and they have the ambition, aspiration and financial capacity to pay a top price. Investors have different motivations.

And when it comes to new dwellings, the biggest source of high costs are politicians are all levels of government. Local government, state governments and the federal government – they all treat the housing industry as a cash cow and load up the cost of new dwellings with taxes, fees and charges.

So when new NSW Premier Gladys Berejiklian declared that housing affordability was one of her top three priorities, she was (like everyone who has come before her) mouthing platitudes.

She’s refusing to even consider doing something about the worst of all home-buyer costs, stamp duty, which in Sydney borders on the obscene – nor about the contribution her government makes to the high cost of creating new dwellings.

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