Recurring Themes

Posted on 13/10/2011  

I’ve just read an article headlined “Housing market fear”. It said economic uncertainty and low levels of consumer confidence had scared buyers out of the property market.

It included calls from the major banks and housing industry groups for cuts in official interest rates.

Sound familiar? In fact it’s an article from a Melbourne newspaper in 1991.

It’s one of numerous media reports from the Nineties I’ve read while checking whether anything much has changed in the rhetoric about our residential property markets.

Fifteen or 20 years ago, sentiments about a host of real estate issues were strikingly similar to the feelings expressed today.

In 1996 the Daily Telegraph in Sydney wrote how low consumer confidence was undermining any chance of a recovery in home building. “People are too concerned about the state of the economy and the prospect of unemployment to take any large financial steps,” it said.

Also in 1996, the same newspaper quoted real estate industry people calling for reform of the NSW taxation system because of its impact on property. It said taxes like stamp duty were damaging housing affordability.

Two years on and media highlighted the plight of first-home buyers who claimed they were priced out of the Sydney market. “Dream chasers not in the hunt,” said one headline, describing young house-hunters faced with homes “impossibly out of their price range”.

One prospective first-home buyer described the Sydney median house price at the time - $299,400 – as “outlandish” and said he wouldn’t be buying at those prices. Thirteen years on, I bet he wishes he had.

Right throughout the Nineties there were streams of articles bemoaning the dire level of housing affordability. One item dated March 1991 forecast an imminent “housing crisis” with affordability the critical issue.

The crisis was not evident as recently as 2009 when first-home buyers were out in strong force, inspired by low interest rates, competitive prices and government grants.

They’re less evident now, but the key issue is economic uncertainty and lack of confidence, rather than the absence of affordable options.

One report from 1998 noted that a rise in the number of home loans had “failed to lift housing industry gloom”, with organisations like Master Builders and the Housing Industry Association warning that activity in the home building sector remained weak, with little prospect of improvement.

We haven’t moved on much, have we?

I have to wonder whether the building industry lobby groups have done anything in the past 15 years other than complain about the lack of demand for their products.

I can’t think of another industry so demanding of government action to fix their problems. I know that government’s history of using the industry as a cash cow is a core issue, but until the building industry sees itself as part of the problem and the solution, we’ll be reading the same headlines in 2020 and beyond.

Another report that sounds eerily familiar is a 1998 piece that forecast that “the Asian crisis” would impact on Australia and seriously deflate our property prices.

Economists were the source of the claims in that article, published in the Herald Sun. Thirteen years on and economists are still chirping from the same song sheet and remain as out of tune today as they were back then.

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