Just who tells builders, developers and speculators when to stop; when to stop building, developing and speculating?
I found the answer to this question while reading a great book on property. It’s a classic.
It’s titled, The Wealth Power of Property.
Not a lot of hype. Not a lot of show off. Not a lot of color photos.
Just a lot of sound information written in plain and simple language; backed up with years of experience.
The guys who wrote it know what they’re talking about. They’ve been in the property business for years. It’s a father and son team, Fred and Brett Johnson.
Fred is a pioneer of sorts in Australian property. According to his earlier book, he and his team were one of the first – if not THE first – to put together property syndicates in Australia. That’s where investors pool funds to buy real estate.
But, let’s get back to our question, who tells builders, developers and speculators when to stop?
Is there a regulatory board that meets on a regular basis to decide?
Is there a government office in charge of “overbuilding?”
Who’s there to put a check on overbuilding?
Well, Fred and Brett answered the question for me. And, it appears to be credible; correct.
As usual, it’s not anything earth shattering. It’s not even surprising.
And, the answer goes a long way in explaining why we have property booms and busts.
Yes, it’s a very simplistic explanation. But sometimes folks try to make things too complicated when the correct answer is right in front of them. It’s obvious.
So, the answer to our question – taken straight from Fred and Brett Johnson’s book – is as follows:
Nobody!
Here’s the entire quote taken straight from the book.
“Nobody tells builders, developers or speculators when to stop. … So at some point in time, there will be more dwellings built and placed on the total market than there are people to occupy them.”
You see, this is where the market goes from boom to bust. Overbuilding.
According to Fred and Brett, this cycle will continue virtually forever because … Nobody tells the builders, developers and speculators when to stop!