THE BOOM IS BACK

10th December 2004

THE BOOM IS BACK
It depends what you mean by "boom".

The boom is back. No, no, not the property boom but the property propaganda boom.

Three weeks after the Federal election, in which almost 75 per cent of property players backed the Libs, the property-is-wonderful songs are back again.

Words like "boom" and "growth" and "hot" are being used to try and breathe life into an exhausted market. It's a market where sales volumes are crashing and developers are increasingly desperate.

Yes, crashing and desperate, that's what's happening back-stage in property today. Sales are down almost 50 per cent in many areas and many developers are resorting to tricks such as tele-marketers offering tax advice.

Tax advice? That's right, invest in property, lose money and claim a tax deduction. Great stuff.

Any consumer who takes a close look at today's market is sure to see the current propaganda boom for exactly what it is - an industry driven attempt to increase sales with scant regard for the welfare of consumers.

Yes, just keep buying folks, nothing to worry about.

In the past three quarters, Melbourne house prices have fallen. Yes, fallen - gone down. Dropped, sunk, slumped, reversed - gone south. All clear?

And this information comes from the Real Estate Institute of Victoria (REIV) those industry stalwarts who get cranky if anyone suggests there is anything wrong with their figures. Even they can't hide this downward spiral.

So what does Enzo Raimondo, the spokesperson for the REIV have to say? What song will he sing this time?

According to Raimondo, these price falls are "further evidence that the residential property market has returned to more sustainable growth patterns."

Yes, that's right. Because prices are falling this is evidence that prices are rising.

But what about Queensland? Well, the front page of Saturday's The Courier-Mail (October 30) carried the headline, Housing Market Defies Slump. One of Queensland's boss agents was singing the post-election tune. The "bounce" in prices had been "almost immediate". A "strong recovery" is supposedly underway.

One enterprising Queensland agent placed an ad in The Age on Saturday (October 30) with the headline - "Brisbane's HOT and Melbourne's NOT". Jim Dinas of LJ Hooker Clayfield has some townhouses he wants Melbournians to buy. "If you want to invest in Australia's fastest growing city", call me. Yes sure, Jim. And how many have you bought?

But then another headline - this time without the influence of a property songster - appeared in Sunday's Sun-Herald in Sydney (October 31). Brisbane property goes off the boil, was the title of an article by finance editor David Potts.

According to research by CommSec, "We now expect small rises and falls in property prices in coming quarters."

Say that again. Prices are going to rise and fall. What is this - a real estate yo-yo?

Even in Tasmania where prices are also going backwards - and the volume of sales is less than half what it was a year ago - the property singers have a song for the malaise. It's all because Tasmania had "an exceptionally cold winter." Of course, that would explain it.

The Real Estate Institute President in Tassie is reportedly saying that November and December "should see another push from the summer tourism wave". Great logic - hotter weather equals hotter prices.

But let's go back to Queensland and get some sanity from someone who does not get a commission when property is sold.

Noel Whittaker's article in the Sunday Mail (October 31) had the headline Property claims get carried away.

Showing obvious restraint, Whittaker looked at the "ridiculous" assertion that property prices double every seven years. If this were true, then today's median Australian house price should be $446 million. Touche Noel.

Let's get something straight. The one thing that ultimately drives any boom is money. Sure, desire and greed and fear and propaganda play their part. But, in the end, it all comes back to money. People can only buy what they can afford to buy.

"If they ain't got the money, then prices ain't goin' nowhere," is the bad English way of describing a good point about the economics of investing.

Finally, let's go south to Melbourne again for the words of Peter Weekes, writing in The Age on Saturday (October 30). His article was headed, Lies, damn lies and house data. Weekes said there is so much conflicting information at the moment that it is "making rational decisions almost impossible."

The 'damn lies' article appeared next to one in which the REIV said "declining values were of no concern". But that's because the REIV is not investing in real estate. No, they are singing songs for those who are selling real estate. Those who get money when investors buy.

Investors who buy property based on the advice of the squawkers in this propaganda boom are likely to have a lot less money in the years ahead.



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This news article was written by Neil Jenman, Author & Consumer advocate.

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