A STRANGE REPAST
To my mind, the highlight of the Real Estate Institute of Victoria’s luncheon at the Sofitel Hotel in Melbourne yesterday was not what keynote speaker Frank Gelber of BIS Shrapnel told the packed audience, as reported by THE AGE, namely that property would keep on booming.
Rather, it was the questions put to him by John Poulter of the Henry George Club that as residential prices are at least 7 times average incomes against the long term average of 3 times, something has to give.
What would happen to Dr Gelber’s predictions, Poulter inquired, if annual wages returned to three times the price of a house? Didn’t his forecast ignore the current plight of consumers who surely underpin the economy?
Tacked to the end of an inadequate response, Frank Gelber asked the questioner: “What would you do to make residential property more affordable then?” “Tax the land” was the reply. As 500 real estate agents drew a collective breath and let out a loud murmer, applause actually emanated from one part of the room!
The Land Values Research Group’s Dr Gavin Putland quickly followed up Poulter’s questions: ” To what extent do your predictions concerning commercial, retail and industrial property depend on the assumption that there will not be a massive correction in the residential market?” Dr Gelber was certain that there will be no major correction.
Perhaps sensing that his forecasting hadn’t quite convinced his audience, Dr Gelber finally asked whether anyone agreed with him about his prognostications of a recovery in the commercial real estate market. Not one person amongst the 500 attendees did. Remember, this was a room filled with real estate people. Frank seemed to be off on his own little tangent.
The first luncheon speaker, Marcus Padley of Australian stock market renown, had earlier signalled his disagreement with the rosy title of Frank Gelber’s talk. In an entertainingly amusing talk, Padley provided plenty of good reasons why people should be out of shares, reminding those who would buy and hold that there is usually a good time to sell. Padley knows his stuff.
The company and victuals were enjoyable.