Stop the rate-rise pain, says Meriton founder Harry Triguboff

Meiton Group founder Harry Triguboff.

OPINION

It is very unfortunate that we are still raising interest rates.

The way inflation is dropping, a little, is because of the migrant workers who are coming to Australia, and oil and gas, where prices are dropping. This is very good. Bring more workers, but where will they live?

The latest idea from governments is to ask developers to provide affordable housing. But why should only developers provide it? Why not everyone?

At the moment, developers have the greatest number of bankruptcies. There are very few viable building companies. Asking only them to give the government more assistance is wrong.

At the same time, the experts are expecting the market to fall because interest rates are rising.

Well, the units are going up in price consistently. But the costs are rising and rents are rising. So how does anyone believe that prices will drop?

We are also getting more investors and foreigners buying. Are they silly? They don’t have to buy in order to get a roof over their heads.

They know it’s a good investment. A person buys units for many years. During that time, interest rates will rise and fall.

I always wrote that we can change interest rates with a stroke of the pen. So really, when interest rates are high, it is a good time to buy. Because when they drop, there will be another reason for apartments to go up.

So don’t worry. Buy! There is a great shortage.

There was some progress. It was a good idea to allow developers to have bigger floor space ratios. That means that the land price per unit will be lower. And that the costs will be brought down.

But now we have an election in NSW so the politicians decide that we will have to waste another few months before we get the price of land down.

Meanwhile, the banks are so scared that properties will go down that they make it difficult to get a new loan. Well, playing it that way only drops the value of the banks’ securities.

So what of all those big blocks which may be approved after six months or more? They will also have to be approved by councils. These council approvals are often unusable so no profit can be made.

So, who knows what will ever be built? At this stage, no one thinks about this new flood of properties that will be developed.

Raising interest rates hurts the real estate market.

So, instead of thinking only of inflation, the authorities must understand that less will be built. Whether raising rates will stop inflation is questionable.

But raising rates definitely stops development. We must get better solutions than asking us to take lodgers.

Once upon a time, we were supposed to only want cottages.

We need more people and we are, thank God, getting them, but must we drop our standard of living, too?

Harry Triguboff is the founder and managing director of Meriton Group