7 April

The reason housing prices don’t come down, no matter how much we build, is because housing is not a ‘market’. In a market, new suppliers can always add new products for sale, which is where competition then happens with existing products. But with property, nobody except government can issue new land. (And that’s a very good thing, for a range of reasons.) To even begin trading in the supposed property market, you have to buy ‘into the market’ (a giveaway of what’s really happening). Property owners are actually, quite literally, franchisees of a monopoly stock of property. Like owners of McDonalds franchises. Nobody expects a new McDonalds store to drive down the prices of Big Macs. McDonalds owns all of the franchises, it’s not going to compete with itself. Similarly existing property owners are not going to compete to drive the price of their own properties down. If on the other hand you’re selling apples or bikes, new suppliers can always enter the market for those and offer new apples and bikes, at more competitive prices. But only government can issue new land. Bathurst now has 3 McDonalds stores (supply is right up), and the price of Big Macs is still going up. One of the assessments in a franchise agreement is whether a new store will harm the business of other nearby stores. QED.