Perhaps Australian private property rights are more secure than in the United States? Take this Queensland case, where owner David Conley – the ‘last man standing’ – is asking $1.8 million to sell his apartment to a local developer, Allan Larkin.
In Australia Conley is entirely within his rights. While the Federal and State Governments may be able to take property (with compensation), this right does not extend (so far as I know) to Governments helping developers obtain property for lower prices than sellers are willing to accept.
Conley’s calculus is to maximise his risk-weighted return from that apartment. He considers that $1.8 million is a good starting offer (perhaps even the minimum he will accept). Yet he runs the risk that the developer might decide to withdraw his offer, which would represent a very large opportunity cost to Conley.
In many parts of the United States, by contrast, there are developer-friendly laws which effectively enable developers to seize property (with the consent of the local government) at what is determined a ‘fair price’.
While this might make development cheaper, it does run roughshod over private property rights. Developers are a powerful lobby group, who have funneled money into political campaigns in Australia just as in the United States. I’m sure that Australian developers would like to replicate US laws with respect to compulsory acquisition. This would be a backward step.
Instead, governments should reduce development costs in other ways, including reducing the burden of regulation in areas such as OH&S and industrial relations. Governments have also driven up the cost of developing green field sites, which is driving up housing costs.
But Mr Conley, like other owners, deserves his private property rights and can sell to another person at whatever price he can extract. Good luck to him.