Real estate industry crackdown
By Jim Dickins
March 28, 2004Competition watchdog Graeme Samuel has launched a blitz against shady real-estate and auction practices in a bid to shore up consumer confidence in the industry.
News of the campaign came as the Reserve Bank sounded alarm bells about soaring household debt, saying Australian families were dangerously exposed to any property downturn.
Samuel, chairman of the Australian Competition and Consumer Commission, told an industry gathering that self-regulation hadn’t worked and it was time to bring in the lawyers.
“May I suggest that the industry has only itself to blame for these consequences,” he said.
“Any industry that fails to respond to legitimate community concerns cannot complain when governments … pick up the ball and run with it.”
This blunt warning followed the ACCC’s commencement of legal action last Thursday against developer Anglo Estates.
The ACCC claims Anglo tried to broker a price-fixing deal with a local council in Western Australia to prevent it selling residential lots for less than an agreed amount.
Anglo will defend the charges, and has lodged writs of its own against the council.
Legal action against property promoter Henry Kaye continues, despite his company having gone into liquidation in February.
Samuel said the ACCC would pursue property spruikers wherever they emerged.
“The property market appears to be cooling, but the ACCC remains concerned at seminars and programs that appear to be little more than an attempt to pressure unsophisticated investors into parting with huge sums,” he said.
Meanwhile, in a major assessment of Australia’s financial stability last week, the Reserve Bank warned that households were taking on unprecedented levels of debt, partly to buy property.
“This run-up in debt has taken the debt-to-income ratio in Australia from a level that was low by international standards a decade ago to a level that is now in the top-end range seen in most other countries,” the bank said.
“With housing prices growing much more quickly than incomes over a number of years, the ratio of house prices to household disposable income has more than doubled since the mid-1980s.”
The proliferation of new home-loan products such as low-doc mortgages and home equity borrowing had only added fuel to the fire, the bank warned.
Although it said most households were coping well so far, thanks in part to low interest rates, the debt binge threatened their welfare and financial stability generally.
“Any downturn in the housing market and, more importantly, the economy generally, could cause default rates to increase,” the assessment said.
Samuel said the ACCC would come down hard on attempts to artificially inflate prices, including the use of dummy bids. “Unless it is fully disclosed both at the start of the auction and at the time of the bid, the commission considers all bidding on behalf of the vendor to be deceptive and misleading conduct,” he said.
“As of this month, all auctioneers in NSW must be registered, and only a single, disclosed vendor bid will be allowed.”
Inaccurate price quotes designed to entice bidders will also come under the microscope.
And advertisements with allegedly deceptive claims – such as those published by Henry Kaye’s National Investment Institute – will be regarded as illegal.
The Sunday Telegraph
http://finance.news.com.au/common/story_page/0,4057,9093380%255E462,00.html
The Doom and Gloom of it all……………………
Home > National News > Article
Home sellers count high cost of greed
By Daniel Dasey
March 28, 2004
The Sun-HeraldPrint this article
Email to a friendHome sellers who turned down hefty auction bids for their properties last year in the hope of snaring a higher price have been stung for tens of thousands of dollars by the slowing property market.
Research shows sellers who were unsuccessful in auctioning their homes last year are being forced to accept up to 25 per cent less than the highest bid made for their properties before they were passed in.
Analysts expect the weaker market, which is allowing buyers in some areas to take their pick of heavily discounted homes, to continue for up to two years.
“There’s no doubt the instances of this occurring have increased,” said Louis Christopher of housing market research company Australian Property Monitors.
“Demand for housing has dramatically fallen away in 2004. Sellers are left with a hot potato,” he said.
The trend towards lower prices this year is also affecting private treaty sales.
The Sun-Herald asked Australian Property Monitors to examine a cross- section of homes that were passed in at auction last year and later sold for less than the highest bid.
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Vendors in suburbs ranging from Woollahra to Merrylands lost tens of thousands and even hundreds of thousands of dollars by holding out for more money, only to have the market slip away from them as interest rates crept up. The research shows a Bronte home that attracted a top bid of $1.65 million in August was sold last month for $1.255 million – a reduction of $395,000.
An Ashfield house for which the owners refused a $701,000 bid in November was sold this month for $630,000.
In Cabramatta, a home that was passed in for $470,000 in December has just been sold for $429,000.
The story is the same for private treaty sales. At Castle Hill, a home advertised for $679,000 in October sold in January for $630,000.
Another Castle Hill house was advertised in October for $919,000 before selling for $800,000, after being passed in at auction.
At Pennant Hills, a home advertised for $780,000 in November was discounted to $750,000 in December and to $719,000 in February. It is now being advertised for $699,000.
Mr Christopher said he believed prices across Sydney were on average 8 to 10 per cent lower than last year and some vendors had been caught by the weaker market.
“I have no doubt there are many sellers who weren’t prepared to take the bid at the time thinking it was too low and are probably now wishing they had done so,” he said.
“The bottom line is the market is weaker now than the end of last year.”
Ray White Real Estate director Sam White said while some areas had made gains, he estimated prices overall in Sydney had slipped between 5 and 10 per cent. “We’re finding it more difficult to sell properties now than six months ago,” he said.
Mr White said he believed the real estate climate had returned to normal.
“For the first time in four or five years, vendors and buyers are pretty much in equal numbers [and] you need to work hard to get a sale.”
He said he expected to see more robust conditions by 2006.
Macquarie Bank head of property research Rod Cornish said he expected more volatility in the housing market in the coming months.
“I don’t think there’s going to be a massive, across-the-board house price slump, but certainly it’s a softer market than it was,” he said.
[cap] Dear Gramyre and mysa,
Thanks for going to the trouble of posting some positive news!!!!
Regards Gatsby.
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