Developers have been gouging you like there's no tomorrow. I opined a while back that the simplest and easiest way to fix the 'housing crisis' would be to end the disgusting relationship between governments and developers. Developers buy land from the government at one price, sit on it for a while and then sell it to you at inflated prices once demand rises. Governments make sure to sell land in large parcels that developers can buy and rig the rules to favour them. In their turn developers make sure the brown bags of cash keep flowing to government er, I mean totally non-conflict-of-interest gifts and favours. There is no need for this, other than to keep various corrupt relationships going. Even if the government tendered to develop the land, kept ownership of it and then sold it to individuals, it would STILL be cheaper than it is now. It looks like we're about to get some evidence of what's going on:
COUNCILS have threatened to take developers to the competition watchdog over practices they claim force up the cost of housing in Queensland.
The Local Government Association yesterday started a Dob in a Developer campaign aimed at gathering detailed information on land banking - or holding land back from the market until prices rise.
The campaign was labelled by the industry as a stunt to divert attention from councils' own inefficiencies.
It also happens that the developers in question just happen to buy a lot of advertising in the Australian, not that it would bias their reporting or anything.
The Opposition Orifice
The public fight comes as the State Government reviews southeast Queensland's urban boundaries, and coincided with the release of figures showing land supply on the Gold Coast would be depleted by 2015.
But the LGAQ said there was plenty of land in the hands of a few companies and pointed to findings by the State Government that there were 55,000 lots available to be developed in the southeast. "We are greatly concerned that the excesses of a minority of property developers need to be reined in," LGAQ president Paul Bell said.
The LGAQ also has the support of councils to gather data on who owns undeveloped land. It also started its own website (www.dobinadeveloper.com) for the public to supply information.
"The objective of the survey is to determine the extent to which one or two major developers in each growth area control the available stock of land," a briefing paper on the LGAQ campaign said.
Findings could be referred to the Australian Competition and Consumer Commission.
Property Council executive director Steve Greenwood said councils were still the biggest hurdle in land supply, with development applications taking too long and infrastructure costs being too high.
He said no company could afford to hold back land from the market for an extended period.
An 'extended period' being the time between your hoard making maximal profit and your creditors arriving to claim various body parts. Clearly the solution is to sell more land to developers quicker, for less money. They will no doubt pass on their savings to property buyers.
5 comments:
At the risk of bursting your (housing) bubble, I'm afraid you've got caught up in the tail end of a greater storm than you realise. Developers have always held on to land to price maximize; they did so after the bubble burst in 1989 and they were doing so during the initial blow out of this bubble in the late nineties. This is an expected behavior under a open-market capitalism style development and land market. You don't have to like it, but it is about as surprising as a Macdonald's advertising campaign.
What this article is actually about is a dog whistle by the QLGA to the Queensland government, who, like most state governments at the moment, are trying to to gain more control over development applications and land use planning. Nominally this is to improve the efficient of LUP, allow more practical and often equitable state wide policy initiatives, and hopefully to remove some of the corruption involved in development apps. Cynically, it is a case of a state government wanting to get hold of some of the brown paper bags currently flowing to councilors (there are some who would suggest this would appear to be the NSW approach). The article is a warning shot, letting the state know that the QLGA can fire up the masses on this issue if need be.
Just thought you'd be interested.
Cheers,
my point is largely that there's an extra layer of cruft between vendor and purchaser by letting developers sell land to private buyers. in a situation where demand is very high, and product very finite, developers can sit on land much longer for more gain. this was not the case in previous housing busts like 1989.
the extra information is interesting though. i can't say i'm shocked either, but i don't think it detracts from the argument that land would be cheaper if certain groups weren't hoarding to make lots of money.
i should also add that we don't have a free market, we have regulated markets with a view towards making them 'free' for whatever value of 'free' the market's regulators decide on. this is for very obvious reasons.
we certainly don't have an open market when it comes to land because it's heavily skewed against people who don't want to buy land for a living.
Look I agree - this isn't the way to help people who aren't in houses at the moment get in them. My point in regard to 1989 was that in that burst developer might have made a little less money, but lots of others made a big loss. Now all these home owners are making a massive (if false) 'profit' by using their house as lines of increasing credit and developers are making an even more massive amount of money by doing what they do best - develop the value of the land. Not a good thing. Not what will happen when the revolution begins and I take over, but something pretty much to be expected in the current state of things.
I've often thought that on the whole I don't think we have a particularly free housing market nor development market. However, our land-purchase market is somewhat free, with the comparatively limited or ineffective social regulations doing very little to muddy the water(although arguably the water is already dirty from the very large financial or economic regulation effects driven by certain large powerful corporations). In general, however, it happens that having the most money makes you the most powerful in our sort of system (see above revolution comments), and market naturally tend to skew towards people with cash.
Our current house issues can't be blamed simply on some big easy big money targets. The fault lies in every day Australians pushing up housing prices through over demand, then using their houses as credit sources in such a way that purchasing a house does not slow down short-term consumption patterns. This underlying problem is made worse by evil develop practices, a deregulated financial system and a system that encourages credit, but deep down it is driven by our need to consume and consume big.
That's what I think, anyway.\
Another thing you might be interested in at the moment is the growing issue of farm buy outs. Farming in australia could be more efficient. However, one of the key problem in the farm sector is the difficulty maintaining the handover ratio (the rate of farms which continue over generations). One interest side problem is that odler city professional 'tree-change' folk have starting to buy up and invest in farm land, and often have considerable greater wads of cash than younger prospective farmers. This means many younger potential farmers are priced out of the farm market as the land value of property becomes greater than the production value of the land. Worst of all, this is occurring in the most fertile and productive areas - because they are also those with the wealthiest regional communities required by the tree-changers to provide for their consumption needs.
Post a Comment