Developer lobby offers self-serving propaganda and outright lies: Terry Ryder

The developer lobby has worked hard to convince everyone that (a) there’s a housing affordability crisis and (b) it can be fixed by making it really easy and seriously profitable for developers to build lots more houses.

The argument is: increase supply and affordability will be solved.

Like most of what comes from the developer lobby, this is a melting pot of myth, self-serving propaganda and outright lies.

On Wednesday, 9 September the keynote address for the Festival of Urbanism at the University of Sydney will be presented by Professor Laurence Murphy, who is Professor of Human Geography in the School of Environment at the University of Auckland. 

The topic of the keynote address is: “Myth: Increasing housing supply leads to more affordable homes.” The University of Sydney’s media alert is headlined: “Why building more houses won’t fix Sydney house prices.”

The university’s media alert makes these comments: “Current NSW Government policy on affordable housing is focused on increasing new housing supply, which in turn is anticipated to put downwards pressure on housing prices. 

“The Sydney market shows that despite substantial increases in housing supply over the last few years, house prices have continued to surge.

“This pattern in Sydney mirrors the experience of other international markets such as the US, Spain and Ireland, where substantial increases in supply were accompanied by large price increases.

“Looking at Ireland, which has about the same population as Sydney, in the mid-1990s Ireland tripled its housing production from around 30,000 homes a year to a peak of 89,000 dwellings in 2006, but house prices increased too by 350% across the country and more than 400% in Dublin.”

It’s always been a major furphy, inspired by self interest, that building more houses would make Sydney homes cheaper. What they want us to believe is that we’d all be better off if developers made more money faster.

Give us lots of cheap land, fast approvals, lower taxes and zero infrastructure charges and we’ll improve affordability. In reality, the only thing that improves in this scenario is developer profitability.

The bottom line is: Sydney doesn’t have a shortage. If it did, rents will be rising, and we haven’t had meaningful rental growth in Sydney for years.

The developer lobby has been shouting shortage for the past decade but for most of this period Sydney prices have shown little growth. 

That has changed in the past two years but it has nothing to do with shortages. It has everything to do with a buoyant NSW economy, tens of billions in infrastructure spending, a significant rise in local business and consumer sentiment and a decade of stagnant prices, leading to a period of catch-up growth which still leaves Sydney behind Perth, Darwin and Melbourne in the long-term capital growth stakes.

Sydney has high property prices because it’s an international city and a wealth magnet. We may think Sydney is expensive but overseas investors from other major international cities like Hong Kong, Singapore, New York, Paris and London think it’s relatively cheap.

The solution to Sydney’s high prices is accepting that there is no solution. And high on the list of non-solutions is the developer lobby’s wish list of measures to help them build more dwellings.

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