The assassination of the National Housing Supply Council was a mercy killing

The assassination of the National Housing Supply Council (NHSC) by the federal government was a mercy killing.

The death of the NHSC means there is one less source of misinformation in the Australian property industry – and, for that, real estate consumers can be grateful.

The NHSC was one of major sources of the myth that Australia has “a chronic housing shortage crisis”. During its mercifully short life, it was little more than a conduit for the views of vested interest groups like the Housing Industry Association and Urban Development Institute of Australia.

Council membership was dominated by organisations and individuals with a vested interest in promoting that idea that Australia has a serious housing shortage and therefore needs more land releases, faster approval processes, smaller fees for developers and a reduction in taxes.

It used flawed methodology to come up with a shortage scenario based on its concept of underlying demand, which it said was more than actual supply. Underlying demand has always been presented in the media as a fact, whereas in reality it is someone’s guesstimate of likely demand for new housing based on population increases and theories about how that translates into demand for housing.

The 2011 report, for example, concluded that the cumulative national shortfall was 186,800 dwellings. The estimate for 2013 was 272,800. It said the shortfall by 2030 would be 640,200 dwellings. Someone show me the queue of 272,800 families or households who want to buy new homes but can’t get them.

The NHSC existed for only five years. During that time we’ve had more years in which national house prices, on average, have fallen than risen. The only year with a substantial escalation in prices was 2010. Prices generally fell in 2011 and 2012. These outcomes are inconsistent with the claim of a massive shortage of dwellings.

The other evidence that contradicts the notion of a serious undersupply comes from data on vacancy rates and rentals.

According to the most recent Real Estate Market Facts report from the Real Estate Institute of Australia, vacancy rates in our major cities included 3.4% in Melbourne, 4.4% in Hobart, 3.6% in Canberra, 3.4% in Perth and 3% in Adelaide. Sydney, Brisbane and Darwin all had vacancy rates above 2%. None of these figures depict a serious surplus, but nor do they describe a chronic shortage.

The Rental Report for the September quarter from Australian Property Monitors found that the annual changes in median house rents for the capital cities included three cities in which rents fell and two others in which there was no change. Only three cities recorded rental growth and, of those, only Perth recorded an annual increase above 4%.

Sydney, the city most often described as having a housing shortage, had zero rental growth for houses over 12 months and just 4% growth for apartments.

With a housing shortage as big as that claimed by the NHSC, rents should be achieving double-digit growth in our major cities.

Real estate organisations have criticised the abolition of the NHSC. The Urban Development Institute of Australia said the NHSC provided “essential data and research” that was “absolutely crucial to informing the government’s approach to addressing Australia’s ongoing housing supply crisis.” The Real Estate Institute of Australia said: “It is imperative that the information contained in the council’s State of Supply Report continues to be available,

I, on the other hand, think it's imperative that it ceases to be available, because it simply added to the misinformation that clogged up communication channels in the real estate industry. The loudest noise in real estate is always the voice of vested interest, and the NHSC was part of white noise that blights the industry.

We don’t need the NHSC and good riddance to it. What we do need is quality information on supply and demand.

In the meantime, if there really is the “housing supply crisis” claimed by the UDIA, it’s up to its members to get out there and build new dwellings. If there really is a shortage of 200,000-plus dwelling, why aren’t they frantically building to meet the demand?