Perth doesn't have the water issues that other major cities have because it already has a desalination plant providing a large chunk of the city's water supply needs.

And now the Western Australia State Government has announced a plan to build a second desalination plant. The $955 million facility will be built south of Perth near Bunbury. According to reports, it will cost $640 milliion to build and another $315 million to integrate it into the state's water supply system.

Perth's first desalination plant, a $400 million facility at Kwinana, was opened earlier this year. The second plant is expected to be providing water by 2011.

I'm glad I'm not a home buyers trying to negotiate the maze of Melbourne's auction system. You see a house you like, you note from the agents' ads that it's in your price range, you spend large sums on building and pest inspections, you spend time on due diligence and organising your finance - and then you turn up at the auction and the bidding starts at a price higher than the advertised price.

This scenario is not the exception but the rule in Melbourne real estate. This enormously-frustrating circumstance is played out every weekend around the Victorian capital because auction agents routinely, knowingly and deliberately under-quote prices in their marketing.

It's illegal but they get away with it because the Consumer Affairs Minister in Victoria does nothing about it. His name is Daniel Andrews and, as a politician whose job is to protect real estate consumers, he's something of a joke. Recently he defended the Real Estate Institute of Victoria, saying: "I want to congratulate the REIV on its leadership on this."

Some years ago I researched under-quoting for a magazine article. My research found that 91% of auction ads greatly under-quoted the eventual selling price. Because this was such a huge problem the Victoria State Government made under-quoting illegal in 2004.

But nothing has changed. Research by The Age newspaper has found that auction properties commonly sell for 25% more than the advertised quote. But Consumer Affairs Victoria has not prosecuted a single agent in three years.

Meanwhile, the REIV continues to defend the indefensible by claiming that a rapidly-rising market is to blame. This larger lie compounds all the smaller lies appearing in auction ads every weekend.

Victoria, according to numbers from the Australian Bureau of Statistics, created nearly half of all new jobs in Australia in April. And it's generated more new jobs in the past 12 months than any other state except Queensland.

This, and a stack of other facts and figures, leads me to ask one of my recurring questions: Why is property so cheap in Melbourne?

Melbourne is the leading population growth city in Australia and the standard-bearer of a state economy that keeps performing solidly - as evidenced by the jobs growth figures. So why do Melbourne houses cost, on average, $170,000 less than Perth houses? Why does it cost significantly more to buy the typical house in Darwin and Canberra than it does in Melbourne? Why is Adelaide the only mainland capital city with real estate significantly cheaper than Melbourne? And why have property values grown more in Canberra, Brisbane and Perth in the past year?

It beats me. I think Melbourne is the most under-valued city in the nation. High population growth, high jobs growth, low residential vacancies, low supply of new dwellings - Melbourne values have to rise some time soon.

The trend in building approvals for new houses and apartments continues to be steadily downwards. This means there is no let-up in sight in the supply-demand pressure which is forcing up house rents.

Data published today by the Housing Industry Association (HIA) shows that new dwelling approvals across Australia fell 11% in March, largely because of a big decrease in approvals for apartments (compared to February).

This monthly result is, in itself, meaningless. What is meaningful is the longer-term trend - which shows a steady decline in new homes being built.

There was some hope in the building industry around the middle of last year, when there were four consecutive months of rising building approvals. But then three interest rate rises in rapid succession bit hard.

Since July 2006 approvals have been once again trending downhill. The HIA's Harley Dale notes in today's report: "The trend in approvals for houses has declined for six consecutive months." Overall, approvals dropped 10% in the year to March.

In March 2004 there were almost 16,000 new dwellings approved. In March 2007 the number was less than 12,000. The HIA continues to blame "government-imposed barriers to home building" for the absence of a recovery in the home-building industry.

Footnote: the results with approvals for new apartments show the folly of reading too much in one month's figures. In February, approvals for home units rose 26%, prompting some to declare a recovery. But in March apartment approvals fell 29%, wiping out the February gains.