Affordability strong, despite media misinformation

Posted on 4/09/2013  
Affordability strong, despite media misinformation

Housing costs have not risen in Australia since 1995. The Australian Bureau of Statistics says the percentage of gross household income spent on housing, both for those with mortgages and those renting, is the same today as it was 28 years ago. We’re still spending about one-fifth of household gross income on accommodation costs.

That’s an extraordinary revelation for anyone who absorbs and believes newspaper headlines. It’s reasonable to ask: Why are we being told we have an affordability crisis? Why is media telling us we have the world’s most unaffordable housing?

The short answer is that, in the context of the nation’s metropolitan newspapers, journalism is on life support. Newspapers are no longer reliable sources of information. They are, too often, vehicles to push the political and commercial views of their owners.

The Murdoch newspapers have been running a political campaign against the current Federal Government that should be an embarrassment to everyone who works for the organisation and considers themselves journalists.

It doesn’t matter whether you want the Government to lose this weekend’s election or not. What matters is that these publications are filled with propaganda when they have an ethical obligation to present balanced news and verified information. Goebbels would be proud of them, but as a consumer I’m repulsed.

This kind of distorted presentation of “news” extends beyond politics. There are few sectors where the content of newspapers is more misleading than in the coverage of real estate.

Again, Murdoch papers are the most culpable. For several years I wrote real estate columns twice a year for The Australian. Eventually I quit. Often my views were censored by the newspaper because they were deemed to be contrary to its commercial interests and political policies.

Companies who had commercial arrangements with the newspaper could not be shown in an unfavourable light. Politicians from certain political parties could not be criticised. Firms ripping off consumers could not be exposed if they were advertisers.

The editorial staff employed by these publications operate under similar restrictions. By definition, they are no longer journalists.

For these and other reasons, I advise consumers at seminars, webinars and home shows that the first rule of effective real estate research is to stop reading newspapers. The real estate content of metropolitan papers is mostly a regurgitation of press releases from individuals and organisations pushing views in which they have a vested interest.

Every time I speak at an event, most questions from the floor are based on misinformation. I’m alarmed at how many people have their heads full of negative, sensationalist nonsense. Often their beliefs are quite opposite to the facts, as revealed by genuine research.

The level of misinformation has reached alarming proportions. It’s a serious issue because it prevents people from making quality investment decisions – decisions that put hundreds of thousands of dollars at risk.

The unrelenting stream of media talk about the so-called affordability crisis, the claim that we have the most expensive dwellings on the planet and hysteria about an impending collapse in property values is a prime example.

We’re told regularly that prices have risen unreasonably and that housing is beyond the reach of first-home buyers.

The ABS data shows how wrong that notion is. So, too, does the latest Affordability Index from the Commonwealth Bank and the Housing Industry Association.

The index shows we have had ten consecutive quarters of improving affordability. Over the past 2-3 years, until the recent recovery, we have had falling prices in our major cities. This, coupled with steadily rising incomes and sharply falling interest rates, means that affordability is the best it’s been any time in the past five years.

The reporting of these facts in newspapers has been muted, to say the least. It sits in stark contrast to the coverage given to an overseas spruiker who seeks to create publicity for a seminar tour or a book launch by claiming our property values will fall 50, 70 or even 90 per cent (an issue I tried to discuss in my column in The Australian but was, once again, censored).

To be informed, and to avoid being misinformed, on real estate or on any topic, consumers must stop reading newspapers and start using the many good sources available via the Internet.

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