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Mark Bouris has told Sky News Australia that rising house prices is a result of poor planning and strategy on the part of governments across the country, as reports emerged of a major shortfall in the number of dwellings needed in NSW over the next five years.
In June, the NSW government reported that the state requires roughly 900,000 more dwellings by 2041 to meet the demand as the population continues to rise.
What’s happening day-to-day? A pretty alarming decrease in the number of dwellings being built, with the NSW Government revealing in June that over the next five years, there will be a “projected housing construction shortfall of 134,000 dwellings.” (1)
This drastic decrease in the supply of housing is, in part, due to the “development approval processing times”, which have “blown out from 69 days on average in July 2021 to 116 days in March 2023” (2).
It’s a simple question with a difficult solution, according to Bouris: “The question is how are we going to increase the supply of new dwellings to match up the population increase, for example, that we’re getting in Sydney as a result of the new immigration policies?”
“The issue is supply and I don’t know whether that’s a federal government problem or a state government problem or a council problem at the local level.”
“The approval process is the thing that’s holding it up because everybody’s got an objection (to new developments) and governments feel as though they have to deal with every single objection there is in the place and as a result of that we don’t get enough new developments and or new dwellings,” he said.
“You can’t have that over the last 18 months to two years and then all of a sudden hit us with a huge immigration increase. Now I understand why they did the immigration increase…but at the same time these are consequences of government policy – this has got nothing to do with landlords.”
“This is another example where government policy or governments in their policy who didn’t look forward as to the results of the outcomes.”
“We’ve got to work out how we can designate how much people can build and where they can build with certainty, not just certainty as to getting approval, but the process and the timing.
Mark made the point that to build a block of say, “500 apartments”, the developer would have to commit hundreds of millions of dollars and “that commitment requires certainty as to time, they don’t want to be sitting there for five years waiting for the approval to come through, or indeed go out and buy [the land] and not get any approval. I mean, what’s the point of that?”
“People don’t want to have to go and live too far away, they want to be close to jobs. You might work at the prison in Little Bay, or you might work at the hospitals out there or at the golf club…you don’t want to have to travel for two hours from Blacktown to Little Bay to do your job.”
“I can understand why people are getting brain damage.”
“How come house prices have gone up so much? Property prices have gone up so much because we’ve got a lack of supply,” Bouris told Sky News Australia.
“How come I can’t rent a place? We can’t rent a place because property supply is not there.”
“Who’s in charge of property supply? Developers would love to supply the market – I tell you who it is, it’s the governments, either local, state and to some extent, federal too.”
What can be done to fix it?
Prime Minister, Anthony Albanese, has been floating a potential deal between State Governments and the Federal Government, aimed at improving the rights of renters, with various outlets reporting that any deal could include a law limiting landlords to one rent increase per year.
Mark Bouris was on-hand at Channel Nine, telling the Today Show Extra that whilst he supports social policy which helps tenants, if the government “all of a sudden starts to restrict the amount of increases of rents that landlords can charge, sure, you will help tenants, but you will decrease the supply of property in Australia and that will cause a problem,” he said.
“In terms of housing supply, the State Government has to look at councils and the various people who make decisions as to what can be developed and what density can be arranged and get tougher on those people who sit around and object to all the development proposals, the NIMBYs (Not-in-my-backyard campaigners who are opposed to property developments).”
“At the end of the day, we’ve got a huge amount of immigration coming into this country, we’ve got a massive shortage of new properties for sale and or for rent, someone’s going to do something about it and it should not be a knee jerk tactical reaction.”
Bouris proposed that governments need to have a strategic meeting, to sit down with developers and start to think about how we can fix housing supply for the long term, by involving developers and asking them: “What have ‘we’ got to do to put more properties in the marketplace? And what will encourage you to develop more?”
Property Prices
CoreLogic’s monthly review of property prices showed a slight decline on the month-on-month average dwelling value, despite fears of skyrocketing house prices.
Bouris quelled the news from CoreLogic, telling Sky News Australia:
“We’re looking at national numbers and then we’re looking at city numbers, so the the growth in those places that are going up is outweighing the decline in those places going down and some places like Perth are doing extraordinarily well. Adelaide is doing very well. Brisbane had a bounce. Sydney is doing really well but only in certain areas.”
“So those average national prices we have been looking at are a little bit misleading.”
“But I have to say, Westpac put out a note recently saying they expect property prices, on a national level, to grow by 7% in 2024, that’s a big number. And it comes down to the supply that they are seeing relative to the demand.”
“However, I’ve been talking to real estate agents (on Property Insights) in the last two weeks, and I’ve been told by some big real estate agents in Sydney that they have currently got three-times more the number of people signing on to sell in September than they had one year ago.”
“Because people are now getting encouraged, and thinking ‘well, I might get a really good price if I sell in September, I better hurry up and get it now’. So they’ve become quite enamoured with selling right now. So I wonder whether we have got to wait until September or October to see what the supply looks like.”
Speaking to the same issue on Channel Nine, Bouris said that it’s no surprise there is confusion around the issue of house prices at the moment: “We have high interest rates, and high property prices. That’s got nothing to do with history. It’s got everything to do with the amount of supply, we’ve got to fix the supply problem, not only for renters, but also to make sure we can control the price rises of houses in this country.”
Interest Rates
With Michelle Bullock, the new RBA Governor, scheduled to take the reigns off Dr Philip Lowe next month, the question on everyone’s lips is whether interest rates will continue to rise, or will the new Governor bring a new strategy for interest rates?
Put simply, “it’s too early” to tell, but Bouris offered:
“I don’t think there are any more rate rises left in the tank.”
“I think the RBA is going to say: ‘that’s it. We’re just going to wait for the net effect or the momentum of the rate rises we’ve already put in place, to take effect over the next 12 months’.”
“I think this is more a question of: how long will these high rates last for? When will we start to see some rate reductions? As opposed to: is there another rate rise coming?”
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Footnotes
- The Premier, Minister for Housing, Minister for Planning and Public Spaces: https://www.nsw.gov.au/media-releases/supporting-affordable-housing-construction
- The Premier, Minister for Housing, Minister for Planning and Public Spaces: https://www.nsw.gov.au/media-releases/supporting-affordable-housing-construction
