GONE! Greed gorges on the property market
On any weekend in one of Australia’s cities, in what has become something of a ritualistic right of passage for aspiring home-owners, crowds of eagle-eyed punters gather on suburban curb sides hoping to secure themselves a slice of residential security, or at least to get a whiff of which way the fickle winds of the housing market are blowing.
As it happened last weekend I had the disconcerting experience of stumbling into just such an auction for an apartment in the building in which I live. In fact, it was for the apartment next door to mine in the Melbourne bay side area of St Kilda.
St Kilda is a suburb to which I hadn’t expected to return. I first moved here when I was a teenager finishing high school and juggling a fairly hedonistic lifestyle.
Yet with the encroaching gentrification and residential squeeze in Melbourne’s northern suburbs - the art-deco sea-breeze charms of the south side have again captured me. I would even say St Kilda is experiencing something of an urban renaissance.
The thing that annoyed me from the weekend auction was the way in which the real estate agent went about selling the place.
I understand that it is the real estate agents job to try to get the best possible price for a vendor but when the sales pitch veers into fabricating the true value of a property for the sake of a quick sale it crosses a line of decency and become a straight out con.
Among the usual spiel about The City on your doorstep, The heart of Cosmopolitan Bayside living, Prestige lifestyle options await - the auctioneer suggested the apartment could easily be rented for $500 a week. In truth, we had just rented our place next door – which was the same size, and in roughly the same condition - for $400 a week just a few months earlier.
So the auctioneer was engaged in over-inflating the potential return on the property before anyone had the opportunity to place a single bid on it. Regardless, the agent started the bidding at 475-thousand dollars and struggled to get an offer. After the second call, someone offered 480 and that was where the bidding stopped.
In a case of divine intervention one of my fellow-tenants, a shaven haired bloke with a bull terrier, walked out of his apartment and right through the crowd gathered just as the agent was seeking higher bids. He turned to the crowd and muttered “480 – you must be f—-in’ joking!” His bull terrier scanned the crowd vaguely threatening before taking a leak on a nearby tree.
All this might be merely amusing if it didn’t underscore a bigger story of denied home ownership opportunities.
Like many other Melbournians in my predicament, I had already been burnt in previous efforts to procure a property within 10 kilometers of the CBD by the phenomenon that has come to be known as under-quoting – where agents lure in potential buyers by setting prices way under the real vendor expectation – in the hope that they yield to a higher price when the auction day comes.
At 41, I am part of a generation that has been largely denied the privilege of home ownership – at least with out the ‘rat-in-a-cage’ feeling of mortgaging the next decades of ones life out to a bank. So instead I have put my head down, kept working full time across several jobs, lived in grungy share-houses longer than I might have liked, put up with grumpy flat mates and dishes never being done.
The problem with the real estate market as it stands is that it directly favours wealthy buyers and investors over tenants. Prior to St Kilda, earlier this year I was forced to move from an Abbotsford share house in Melbourne’s inner north when the owner decided to sell all the terrace houses in our section of the street complaining that he could no longer afford the land tax.
It is relatively easy to replace one rental property with a new one if you are in secure employment – but what can never be replaced is the community that might have formed there. We were given the legally required 90 days to clean up and move out of our house in Abbotsford. After a seven year stint of living there among neighbors we came to enjoy as good friends, almost as our local family.
When real estate agents and auctioneers manipulate the market by building up peoples expectations beyond what is reasonable, fair or based on reality – and attempt to appeal to investor buyers over those who simply want a good place to live - they push the prices up, keep home ownership out of reach to more Australians, and force locals further and further out of inner suburban areas.
Lack of housing density and inadequate tenancy protection is surely a large part of this. But unscrupulous agents and greedy investors merely looking to turn a profit rather than build communities must surely take part of the blame as well.
James Norman is a Melbourne writer.
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