Economists BISS are reported in to-day's Courier Mail as blaming "greedy" developers for triggering a price boom of up to 40% within 3 years in Brisbane. Let's hope they were misquoted.
BISS are right in their forecast, but for the wrong reasons. Booms occur in cycles, generally every 7 years, as a result of the "natural" oscillations in the property market (the last boom occurred in 2002-3).This is a phenomenon of most capitalist economies. Booms are not caused by "greedy" developers colluding to exhaust supply in order to somehow distort the market with the aim of re-entering that market when prices have risen.
The building industry is very close to operating in pure competition. It consists of many players and subsidiaries, of different sizes, but mostly small operators who cannot afford to withdraw their services. They do not, and could not, contrive to run down supply to raise prices.
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