Ob­ses­sion with new rules leaves buy­ers bam­boo­zled

The Weekend Post - Real Estate - - Front Page -

be­com­ing an Aussie ob­ses­sion. New laws, rules and reg­u­la­tions, along with re­vi­sions to ex­ist­ing di­rec­tives, seem to be ap­pear­ing on a never-end­ing ba­sis. And the real estate mar­ket hasn’t es­caped this bar­rage.

Many of these laws are un­der­stand­able and re­quired.

Some of us may re­mem­ber the days when Gold Coast real estate had more sharks swim­ming in it than the nearby wa­ters or when it was pos­si­ble to take a smoke break on a high­rise build­ing site right next to gas can­is­ters, “cor­doned off” with guard rails that only went to an­kle height. In that sense, rules and reg­u­la­tions have evolved in a pro­duc­tive, sen­si­ble and in­tel­li­gent way.

That said, I of­ten dis­cover new laws which creep into state real estate mar­kets that defy logic or are sim­ply im­pos­si­ble to police. Con­sider mod­ern agents.

The list of things they’re not al­lowed to do has grown longer than ever be­fore.

I am sure it is only a mat­ter of time be­fore they’re banned from ex­press­ing any form of opinion, sug­ges­tion or ad­vice — lest they up­set some­one.

Queens­land agents, for ex­am­ple, can­not dis­close a price fig­ure for a home auc­tion. Not a guide. Noth­ing. In NSW, agents are banned from us­ing the term “of­fers over”. There is also a va­ri­ety of ill-con­ceived guide­lines for de­vel­op­ments in some states.

These in­clude min­i­mum unit is­sues and win­dow num­bers. The list goes on. And all of it comes un­der the cat­e­gory of “point­less, we’ve clearly lost the plot” type rules.

Some may claim these mea­sures are mar­ket en­hanc­ing, but I’d ar­gue that variations in state leg­is­la­tion for home sales and con­struc­tion shouldn’t ex­ist.

There may be some ben­e­fit in im­ple­ment­ing price con­trol­ling in many ar­eas of com­merce, but real estate is unique. The beauty of the mar­ket is that buy­ers and sell­ers work ev­ery­thing out on their own.

If a de­vel­oper de­signs a tiny stu­dio apart­ment and no one wants to buy it, guess what? They won’t build them at all or they will re­design the spa­ces to meet mar­ket de­mand.

Buy­ers want to make the choices them­selves. If a small home is the an­swer to liv­ing in their dream ur­ban lo­ca­tion, cur­rent leg­is­la­tion shouldn’t stop them mak­ing this de­ci­sion.

Let the mar­ket de­cide what the stan­dards are. A unit with just one win­dow may not sound ap­peal­ing to some, but in many in­ter­na­tional cities that’s all that’s on of­fer and buy­ers are will­ing to pur­chase them.

Tokyo buy­ers, for ex­am­ple, love stu­dio apart­ments. They’re quite happy with one win­dow and just 25sq m.

In Sin­ga­pore, a com­pact 34sq m is fairly stan­dard for ac­com­mo­da­tion. In Lon­don, you can buy a 39sq m stu­dio with just one win­dow and no park­ing in a trendy West End area for $2.76 mil­lion.

Move to down­town Har­lem in New York City and you can grab a 40sq m unit for un­der $300,000, but it’s six floors up with no lift and two bed­rooms and a liv­ing area have been fit­ted into the tiny space.

As for our new pas­sion for pric­ing con­trol, is it re­ally nec­es­sary? Or is it sim­ply a re­sult of the liti­gious mod­ern so­ci­ety in Aus­tralia?

The way I see it, agents who are in­tent on act­ing in other than pro­fes­sional ways will con­tinue to do so, laws or no laws — as hap­pens in all pro­fes­sions.

As for de­vel­op­ers, if they de­sign a prod­uct that no one wants to buy, the mar­ket will tell them — no lawyers or coun­cil of­fi­cials needed.

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