23 January 2006

Real Estate Spivs v. Economists on the state of the market

| johnboy
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The Canberra Times has got a story, on the assessment of Access Economics, that 2500 new units going on the real estate market in 2006 is probably going to keep prices down for the next 12 months. The ACT Government doesn’t seem to think this is remarkable news either.

What caught my eye was this intervention by the Real Estate Institute:

ACT Real Estate Institute president Stan Platis and Maloney’s estate agency principal Peter Maloney said Access Economics had never had a positive word to say about the Canberra housing market.

Interestingly they seem to think high disposable incomes will drive demand faster than supply.

Reading the article to then end it does seem that the economists haven’t factored in all the cunning tricks of developers, in this case putting off releases to keep the market extortionate buoyant.

Does anyone think the ACCC should be looking at this form of price fixing?

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Never amazes me that people who rely on the ability for normal people to be able to buy homes to make a living are always convinced that the current level of house prices is not only sustainable but going to increase.

Lets see, the difference between the median house price and median wages is the greatest it has ever been.

The Feds are doing their best to keep wages down and inflation down at the same time.

So if no one gets a pay rise or very few do how are they going to buy more expensive houses.

Maybe all the wealthy developers and real estate agents are going to buy two or three and live in them all themselves.

Do the math!

If prices keep going up, but peoples capacity to pay those prices does not then something has to change. Don’t need a BEc to work that out.

Canberra is overpriced. The real estate people better work out what real job they are going to get.

i woudl think that having a decline in population would drive housing supply and demand down but it hasnt.

prices seem to have levelled off though.

True. But the onus of proof’s a bitch.

Anyway – any developer with a modicum of sense isn’t going to release all the goodies at once and flood the market. If they can sit back a bit, they will.

Last I looked, property developers weren’t in the business of losing money.

Well if it was the developers speaking about decisions they’d reached themselves then you’d have a good point.

But it’s the peak bodies speaking seemingly well-informed as to the developers plans, which makes you wonder if meetings were held and decisions made.

Which would be very much illegal.

Well, the ACCC could look into it all you want, but they couldn’t do squat. There’s nothing in the Trade Practices Act that says you have to sell anything.

As far as the law is concerned, there’s nothing wrong with holding out on the supply of a commodity (in this case apartments) until you can get a good price, which is precisely what the developers are doing.

And no, that doesn’t make it a good thing; but hey, that’s capitalism.

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