The 7.30 Report

Last night’s 7.30 Report carried a piece on Australia’s property market. Slowly but surely the mainstream press is waking up to what is going to be one of the dominant stories on the domestic scene here for the next 24 months at least.

Most local pundits and almost all those connected with the real estate industry in Australia have vehemently denied the existence of a bubble, despite noises from very many credible voices abroad.

Ten minutes is, quite frankly, a completely inadequate amount of time to delve into a topic in any depth, and so, the piece came across as being very light on substance. Certainly, no impartial observer could be convinced either way.

What irks me is that the programme makers allowed most of the interviewees to air their views on the future of the market without offering any hard evidence to support these views – or, at least, if they did offer any evidence, this was not screened. How can anyone’s opinion be worth a grain of salt unless backed up by intellectually robust evidence? Tim Lawless of RP Data was happy to opine that he saw the market turning round in Brisbane and Perth soon and, in this instance, did offer a reason: those two cities had outperformed their peers for a long while during this past decade and are now underperforming as a result, which in turn means they will inevitably catch up again at some point. Huh?

I could almost accept this argument but for the fact that Mr Lawless, and many others, are clearly unaware of the more important stuff going on in the rest of the world right now – things that are material to Australia and its housing market. It’s this big picture stuff that will ultimately determine the fortunes of Australia’s economy and the future of its property market. What many fail to appreciate is that Australia’s economy does not exist in a vacuum. None of this was tackled on the programme – all we had was the ‘narrow view’.

Population growth was mentioned in the show and has been one of the mainstays of the pro-property lobby’s “why the market won’t collapse here” argument i.e. this is simply part of the supply/demand argument – Econ 101. However, right now, there are 370,000 properties on the market across Australia, a number which is growing fast. To put this in some perspective, this number is almost 70% higher today than it was 12 months ago. In other words, demand is currently being overwhelmed by supply – just in case anyone was in any doubt. Funnily enough, the supply/demand argument has suddenly gone out of vogue with the spruikers – I can’t think for the life of me why…

The market bulls are fast beginning to run out of even vaguely credible reasons for why there won’t be a crash here in good old Oz and so they’re now reduced to the tactic of issuing bullish statements while providing no evidence at all – and that pretty much sums up what was on offer on last night’s 7.30 Report.