The good doctor is at it again.
The Sydney Morning
Property Advertiser Herald’s headline is hilarious; Economist tears roof off affordability study.
Does he though? Really?
Let’s have a look shall we, while bearing in mind how much of a stinky-pants failure he tends to be at this prediction lark.
Apparently, it’s wrong to suggest that Australian property prices are the 2nd most unaffordable in the world, with only Hong Kong (an island plus a small parcel of land with a tightly-controlled armed border to mainland China) pipping us at the post.
You see, what the study has failed to factor in to their figures is the “lack of supply” here in Australia.
Now, to be fair to Doctor Andrew Wilson, “economist”, he doesn’t explicitly say of what it is we are so lacking in supply, just leaves it hanging there for us to infer.
I’m guessing that what he wants us to think is that there aren’t enough houses or flats in Sydney and, like any commodity with finite availability, the price rises as the market discovers its rarity.
Here’s a thought though; I hardly see any homeless people in Sydney. A few druggies and mentalists wandering around George Street and the odd backpacker waiting for a wire transfer from back home but small beer really.
Perhaps the only time one can accurately use the term “supply” with regards to residential property is when discussing bank lending.
Maybe, just maybe; Property prices = desire + credit
I doubt we’ll ever read anything on that theme in the SMH. Actually, we’ll be lucky to ever read it again after the paywall is built.
But Doctor Andrew makes another claim too; that property prices in Sydney are rising.
Hmmm. Liar, liar, pants on fire.
They nominally rose 1.5% last year, granted.
But what was CPI? Oh, about 2%, and it probably felt a lot more if you were an average Joe.
So, house prices went up in terms of dollars but not in terms of things like bread or electricity or health insurance or school fees, for example.
The Doc is an economist so he already knows that, doesn’t he? But for some reason he chooses not to mention it, probably too complex a concept to get across in 300 words in a
paid for advertorial news article.
As Upton Sinclair so accurately put it,
It is difficult to get a man to understand something when his salary depends on him not understanding it.
See also climate change scientists (hat tip Whale Oil).