News media contradiction regarding the Australian rental crisis?

August 5th, 2008

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Let’s have some humour today. Recently, we saw this news article in the Sydney Morning Herald, Rent or buy, families hit a brick wall:

SYDNEYSIDERS are caught in a bind as rising interest rates push more people into mortgage stress at the same time as the rental squeeze makes it impossible for people in some suburbs to find rental accommodation. Young families are particularly exposed.

So, according to that article, we have a rental crisis and a housing shortage in Sydney.

Right.

Then we saw this news article in The Australian, Rental crisis ‘over’ as vacancies rise:

THE rental crisis is a thing of the past in much of Sydney and the nationwide housing shortage is easing, with a 50 per cent surge in listings for rental accommodation in the past year.”

So, according to these two mainstream news media, do we or do we not have a rental crisis? Take a read at this paragraph in The Australian article,

SQM Research’s vacancy rate figures are much higher than those published by the only other major compiler of vacancy rate data, the Real Estate Institute of Australia, the peak property industry body, and its state subsidiaries. According to the REIA’s most recent figures, Sydney’s vacancy rate was 1 per cent in March, less than a third of that reported by SQM Research.

So, who are the guys in the “Real Estate Institute of Australia” (REIA)? Should we trust their figures or SQM Research’s figures? Elsewhere, in another article from the Daily Telegraph, Rental crisis might be overblown,

Mr Christopher is critical of the REIA?s data and said there are potential conflicts of interest in the way the information is collected.

?There are some serious questions that need to be answered surrounding the method used by the various industry bodies in calculating the vacancy rate, their sample sizes and how they compile their vacancy rate data,? he said.

A spokesman for the Real Estate Institute said the vacancy data released by the institute was based on data sent in from its members – real estate agents from around the country. He acknowledged there were flaws in the system and said the institute would welcome independent research on the subject.

So, do you smell a rat here? As we said before in Australian housing shortage myth,

When it comes to solving Australia?s housing problem, there is an entrenched superstition that makes many believe that there is a housing ?shortage? in Australia. This superstition has resulted in many proposed solutions to the housing affordability crisis that are completely useless, wasteful and counter-productive. For many vested interests, it may as well be that such a superstition be propagated. But for the sake of our nation, it is in everyone?s interest that this superstition be demolished.

By the way, this article is in no way pointing the finger at real-estates agents. Rather, we believe that due to the way the human brain is wired, conflict of interests can often result in biased information, especially when the issue concerns money and wealth. That’s why it is unwise for doctors to treat themselves or their family members- few humans can be objective in such situations.

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