I recently wrote an article about the high land prices in Darwin compared to what we pay in Alice Springs. When compared with Darwin, our land prices look cheap. But, this doesn’t take away from the fact that land prices are relatively high and rising rapidly in the Alice. In this article I explore the “supply and demand” explanation. Essentially, this theory says we have a shortage of land therefore the prices go up. The fatal flaw with this theory is fundamental. There’s no shortage of land in Central Australia!
Hot Commodity
Land is a hot commodity in Alice Springs. Housing blocks keep rising in price. What seemed high six months ago now seems like a good buy. For instance, we bought a block of land in early 2009 for $155,000. Now, in late November, we’d probably have to pay somewhere between $210,000 and $220,000 to buy the same 800 square meter block. Maybe more. The question on my mind is why? What’s driving the rising land prices?
Supply and Demand
When I talk to people about the rising land prices the explanation that seems to crop up the most is supply and demand. It’s not unusual to hear someone say, “It’s just a case of supply and demand. There’s not enough land.” When I hear this explanation I have a hard time keeping a straight face. I try to hold back from bursting out laughing.
Coconuts for Everyone
It would be like going to an island fully laden with coconut trees and seeing fresh coconuts – which are better than water for quenching thirst and providing vital nutrients – everywhere. Coconuts growing in absolute abundance. Welcome to Coconut Island.
But, you soon discover all’s not well. There’s a problem.
You meet up with the islanders and discover many of them dying of thirst. You ask why? And they tell you there’s a shortage of coconuts.
What do you say to that?
A shortage of coconuts, what are you talking about? There are refreshing and delicious coconuts everywhere. How can you be dying of thirst? Just, help yourself!
But, the villagers come back and say, “Oh, no. We can only take coconuts from certain trees. Only the trees the elders have approved. All the other trees are off limits.”
Sorry, Can’t Help You
Again, what do you say to that?
If you want to live under those rules that’s your business. But, how can you help these people if that’s how they decide to play the game.
After all, it is a game. They’re just following somebody’s made up rules. The coconuts are right there. Just take one and drink. Otherwise, it’s just going to waste anyway. But, if those are your rules, hate to intrude and tell you how to run your village. So, sorry can’t help you. Bye.
Land for Everyone
What does this have to do with land in the Alice? Ok, when someone gives me the “no land” excuse, I ask them a standard question as follows: “Tell me then; when I get in a plane and fly from Sydney to the Alice, what’s all that brown stuff I see under the plane when I look out the window?” (Answer: Land, land, land! Vast tracks of deserted land for as far as the eye can see in all directions!)
They usually reply, “Oh, I mean available land. Land available to build on.”
I then ask them, “So, you agree then there’s plenty of land?”
“Of course there is, but it’s just not available to build on.” Is the usual response.
Sounds Like Coconut Island
In other words, the “elders” haven’t given their approval. Sounds a lot like Coconut Island doesn’t it? Plenty of land, just not approved by the elders. And, you mean to tell me that’s why we have high and rapidly rising land prices? Is that a good reason? (See NOTE below.)
Options?
Are prospective home buyers seeing their incomes rise as fast as the Alice Springs land prices? If so, great. But, if not, what do they do?
Option 1: Save
Do they save up over the next year or two? I’m not sure if this strategy will work as the price of land may be a lot higher two years from now (unless the elders change the rules of the game). So, two years from now the buyer is shut out again because the saved deposit isn’t big enough. Two years ago it would have been big enough, but not now. Better luck next time.
Option 2: Rent and wait for Prices to Drop
Do they just keep renting, hoping for a big drop in the prices? I arrived in the Alice in 1998 and I’ve never seen a big drop in the prices. I’m not sure if this strategy will work either.
By the way, have you checked out the rent prices in the Alice lately? With rents this high, saving deposit money may be a serious challenge.
Option 3: Wait for Rules to Change
They may wait for the rules to change. Wait patiently for the “elders” to make the necessary rule changes so land prices are “affordable” for everyone. This seems like a reasonable option. But, how long are folks willing to wait?
Option 4: Leave.
Or, do they just evaluate the situation and come to the conclusion, “Sorry, if you want to live under those rules that’s your business. If that’s how you decide to play the game – fine. And, after all, it is a game. Your just following someone’s made up rules. The land is right there. Just release if for building. But, if those are your rules, hate to intrude and tell you how to run your town. So, sorry can’t help you. I’m leaving. Bye.
Hope the Good Ones Stay
I hope the talented, hardworking folks are not taking option 4. These are the people we need on our business, government and community teams. We need them to help us prosper. Help us deliver, develop and build our products and services. We need the skilled laborers, the hard workers, the entrepreneurs, the business minded, and the risk takers. Will they find some other community to share their talents? Are they being attracted and recruited to more “livelihood friendly” communities? Communities where land and housing are more affordable in comparison with wages?
Hard to Justify High and Rising Land Prices
We need to keep asking ourselves, “With the vast amount of land here in Central Australia, how on earth can we justify high and rising land prices?”
Next time you find yourself thinking “high land prices” in the Alice makes sense, try explaining it to someone from let’s say Indonesia. Would they have any idea what you’re talking about? See how long it would take before their eyes glazed over with disbelief.
Or, picture yourself listening to the people of Coconut Island trying to tell you why they’re dying of thirst when there are coconuts everywhere around them. How long would you listen before your eyes started to glaze over with disbelief?
NOTE: For further reading on “the elders” and land approvals, read the article “We hear you, but …” by Chris Young in the 13 Nov 2009 issue of the NT Chamber of Commerce magazine “The Voice.” He squarely places the problem with the NT government and their reluctance to release land in a timely manner.