While the Australian Competition and Consumer Commission (ACCC) is busy taking on Coles and Woolworths over fuel discounts (hardly an issue of national importance), Prosper has issued a timely Media Release questioning why the ACCC continues to ignore Australia’s land banking cartel:
“The global property bubble is accelerating in dozens of countries. The few agencies monitoring powerful forces in society prefer minor issues when housing affordability is barring the progress of two entire generations here in Australia. The affordability pressures on families, small business and long term renters shrink discretionary incomes and stifle economic activity.”
“In 2012 we asked our supporters to write to the ACCC to investigate price manipulation in real estate. We emphasised the damaging trends evident in staged releases of large new housing estates. Some developments have over 20 staged releases over a number of years. One annual report planned a 17 year staged release program.”
“In what other industry can such a vital element be withheld from the market to drive prices higher? Imagine the uproar if water was sold in the same way.”
“Few can argue with the logic. Drip feeding land to the market is a form of rationing. It creates the illusion of scarcity and puts upward pressure on prices. Why is this obvious market failure beyond ACCC investigation?”
“This is contrary to the ACCC’s defined task: ‘Our role is to protect, strengthen and supplement the way competition works in Australian markets and industries to improve the efficiency of the economy and to increase the welfare of Australians.'”
“There is no more important market than land to ensure citizens’ independence, self-sufficiency and the competitiveness of our industry.”
“Yet supply manipulation is legion. In the Shire of Mitchell (Whittlesea), when land prices were falling at the second fastest rate since 1936 (June quarter of 2012), developers pulled 58% of the land supply from the market in one quarter alone.”
“Nearly every week there are radiant articles about how staged releases bring fresh lots to market. There is no analysis on how staging ratchets land prices upward.”
The ACCC responded to Prosper’s request by stating ‘there was not enough evidence’.
“Unfortunately access to the necessary data would cost thousands upon thousands of dollars. Up until the 1970’s, this data was freely available. We believe there is enough evidence in this, this (Atherstone) and this article to warrant a government investigation into today’s real estate for ransom mentality.”
Sadly, while I agree wholeheartedly with Prosper’s arguments, the ACCC will never act. Australia’s manipulated land market has the full support of the Australian Government, as articulated recently by Treasurer Joe Hockey and Prime Minister Abbott.
Accordingly, we are left with a toothless authority that prefers to prosecute token cases in order to give Australians the false impression that it is tough on competition. In the meantime, far more important breaches of competition go on unperturbed and unpunished.
