as published in Crikey 20/02/09
Mirvac yesterday admitted what many affordability watchers know. The housing market is manipulated to suit shareholders over householders.
Due to the fear that an $81.4m half yearly operating profit is insufficient, first home buyers will have to pay higher land and housing prices to support Mirvac’s Executive Incentive Scheme.
Mirvac managing director Nick Collishaw admits to the immense power of land monopolists in Mirvac to delay land releases in existing estates:
“Effectively what we are doing for the bulk of the projects that we have in Victoria is managing a staged release — rather than have a release with 100 lots in it, the stage sizes will be much smaller.”
This behaviour exhibits why Brumby’s land supply handout to the property lobby will do nothing to assist affordability. Land and housing releases are manipulated to suit profiteering over people.
As Australia’s affordability epidemic gets left behind in the backwash of the GFC, the genuine land supply issue is that controlled privately by land banking developers.
Compounding these issues, the write-offs on Mirvac’s investment properties total more than $800 million dollars. Top and tailing the benefits of the system, Mirvac has the power to drip feed land and housing to market such that home buyers of all generations are guaranteed to pay 40% of their income on rent or mortgages.
And the government is silent on this market manipulation.
Governments at all levels are complicit in the rights of land speculators over and above the future of its people. One need only refer to the recent AEC figures to understand the power of lobbyocracy.
For the productive economy to survive, we must push for more effective public finance policy. Higher holding charges on land are needed to force land prices back to affordable levels. Spin-offs include the abolition of payroll, GST and a massive cut in income taxes. Investment in new infrastructure becomes self funding through land value capture.
When this occurs, the land and housing market will no longer be seen as a casino. The risk of global meltdowns will be reduced when we no longer have to borrow so much to put a roof over our heads. Speculators will become producers, hopefully funding the inventions needed for a sustainable rather than sprawling society .
Relatively speaking, who really benefits from rising land and housing prices?