The housing market in Australia continues to boom and more and more families see this as a one way path to wealth creation. In a sign of how crazy things are getting, the Weekend Financial Review reports that:
‘Financial advisers are being offered “no course, no examination, 100 per cent success rate” real estate qualifications that could provide big commissions from investors wanting to plunge into booming property markets.’
At a time when commissions in the financial planning industry are under threat, the gravy coming from the property market is just too good too pass up. As if Australia needed to direct any more of its scarce capital into the property market! Now, by incentivising financial planners, property as an ‘investment’ will receive endorsement over most other forms of productive investment.
The last thing we need is to have more spruikers in the industry. Especially like the one we saw on Saturday. We were on the way back from taking our girls to the park when we noticed an auction about to get underway (in Melbourne).
The spruiker, previously known as an auctioneer, spent five minutes extolling the virtues of the neighbourhood and the surrounds. Fair enough. But then he launched his ‘fear of missing out campaign’, a hyperbolic rambling designed to panic bidders into going as far as possible to ‘get in’.
We’re paraphrasing here, but the gist of the final pitch was this:
‘Bid strongly today folks, because prices will only keep going up and up. If you’ve been listening to your parents lately, and they’ve been telling you that property is overpriced, then THEY’VE LOST YOU MONEY. They should be shot [seriously] for dishing out such dud advice. They’re wrong. Get in now because this market is hot and you won’t get another chance.’
Seriously…that was pretty much what he said. Is this industry not regulated? Does it not have some sort of code of conduct that is at least loosely adhered to?
We weren’t the only ones shocked. A number of residents had come along to check out the proceedings and were rolling eyes at some of the comments. They’ve owned property through a number of cycles; they know how it works. They know we’re near the top of another one now.
By the way, someone took the bait. The shoebox sold for $1.1 million, about $300,000 over reserve. It would be lucky to rent for $650/week. It’s just as well that prices never go down. And it’s just as well that return on investment (either implicit or explicit) doesn’t matter anymore.
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