Sunday, March 13, 2022

Falinski's housing inquiry report will be peppered with lobbyist catch phrases...

...and many journalists will lap it up uncritically.

Like the dozens of previous housing inquiries before it, Falinski’s inquiry into housing supply will find that giving valuable rezoning development rights to well-connected property owners and developers is the housing policy we need.

The puzzling part is that the housing developers interviewed under oath during the inquiry said that they wouldn’t flood the market to decrease prices even if they could.

Falinksi: Is it not your view that, if we increase the amount of supply, prices will go down?

Mr Helmers: I don't think that's the case…

Mr Long: My view is consistent with Richard's: rezonings won't necessarily lead to lower housing prices…
Falinksi: …[d]o you think if state local governments rezoned more land to allow greater supply, that you could see dwelling prices drop by 20 per cent?

Mr Warner: No. Straight out, I concur with some of the comments before. It's not going to create that much of a difference.

For perspective, Australian capital city housing prices increased 21.7% in the year to September 2021. No housing developer thought it plausible that mass upzoning could get close to reversing one year’s price growth.

Instead, they all latched on to the phrase that mass rezoning will “will moderate price growth”. I have no idea what this means. If price growth is zero in the counterfactual, will it mean prices start falling? If it moderates price growth, why can’t rezoning moderate price growth down to a negative?


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