Dr Cameron Murray – author of the Book Game of Mates – gave stunning testimony to the parliamentary inquiry into housing affordability, whereby he documented how developers manipulate the land market to ration supply and maximise their profits.
Shortly afterwards, ‘Highrise’ Harry Triguboff’s explained how Meriton had deliberately withheld apartment stock from the market to drive up prices:
The documents showed a 15 per cent increase in the number of investment units including serviced apartments on the Meriton books, with the company owning 13,314 units as at June 30.
Meriton owns more units than it sold for the year, which was 12,359 apartments or about 4 per cent less than it sold in 2020.
Mr Triguboff, who said he expected a $400m profit from leasing the units owned by Meriton next year, told The Australian: “I am holding a lot more than I am selling at the moment, and as the value of property goes up the value of what I have kept rises…
Mr Triguboff said demand for his apartments was outstripping supply, a problem he blamed on a lack of approvals by local government authorities in NSW and Queensland…
Mr Triguboff said Meriton had also been able to withstand “terrible” government policies restricting international student and migrant arrivals – “they are a big part of my business usually” – but hoped that part of the market would pick up in the new year.
So according to Highrise Harry, demand for his apartments was outstripping supply due to planning constraints, yet he has chosen to hold onto properties and drip-fed stock onto the market to maximise returns! Talk about a contradiction.
Hilariously, property developer Mirvac Group seems to be engaging in similar supply manipulation, with CEO Susan Lloyd-Hurwitz stating that with demand rising on the back of immigration, Mirvac will respond by releasing 900 apartments to the market in Sydney, Melbourne and Brisbane, compared with about 700 in 2021-22:
Mirvac will bring 900 apartments to market this year as inbound foreign migration returns and in response to an east coast housing market that was “increasingly undersupplied” by a hiatus in new developments, chief executive Susan Lloyd-Hurwitz said.
The new apartment launches across Brisbane, Melbourne and Sydney [is] more than the 700 it released last year…
All of which shows that it is the deliberate actions of developers, not planning restrictions, that is causing any ‘lack of supply’ in the housing market.
It is ‘economics 101’ for developers to act like a cartel, exercise their market power, and maximise their profits.
Developers are sitting on masses of zoned land.
How else would lot prices have soared while developers sat a mountain of zoned residential land, totaling a decade-plus of supply?
Why would developers flood the market with supply when they can instead ration it and sell their stock at higher prices, maximising their profits?
