Australia a world leader in real estate transparency, but status threatened
Real estate sales and transparency don’t always go hand in hand, but Australia seems to be do it better than the rest of the world.
With just the UK doing better, estate agency JLL’s latest Global Real Estate Transparency Index ranks Australia second among 109 markets across the globe.
Reduced purchasing and ownership risks means greater attraction.
JLL considered factors such as the availability of market data, governance, transaction processes, property rights and the regulatory and legal environment.
Australia has a strong legal framework to define and protect property rights and an open and established bidding process, said the JLL head of Australasian research, David Rees.
“The market has a long history of transactional and time series data-information across all the major metrics, data is easily accessible to most participants,” Dr Rees said.
Dr Rees said evidence from the past 12 years of the survey pointed to a correlation between market transparency and investment volumes for both commercial and residential property.
Australia's safe haven status is a key reasons behind the investment of the Chinese whose major cities Beijing and Shanghai sit in the semi-transparent category.
Dr Rees says the rapid growth of cross-border investment means that investors place a big premium on accurate and timely information.
Australia is indeed fortunate to have CoreLogic's home value index, which is the most sophisticated hedonic benchmark in the world.
CoreLogic's numbers follow adjustment for the types of homes that are sold in any period by collating their land size, location and specific attributes, including the number of bedrooms, bathrooms, car spaces and so on.
The land registry is crucial for the security of property ownership as it guarantees the title to everyone’s land.
Its pending sale to a private operator has not been on the public radar, but Margaret Hole, a former president of the NSW Law Society, has been among those who've raised concerns.
Under our world class Torrens title system the land title is guaranteed by the independent scrutiny of the State Government. However once the system is privatised, the government guarantee will be downgraded with an inevitable less reliable service than the one I've seen whenever visiting the land titles office over the past three decades.
The trained government staff have required sound knowledge of the survey process, legal matters related to plan and title examination, road redefinition, council requirements, strata and community title legislation, the Railways Act, the Pipelines Act and many other regulations.
Once it is private hands, and the current checks and balances are reduced, it's thought title insurance will become essential for the 200,000 plus annual land transfers potentially costing home buyers $500 million annually.
Land title insurance has been unnecessary because the integrity of the system of registration since 1863 with fewer than a handful of claims annually against the Torrens Assurance Fund.
The UK government recently considered privatising its land registry, but hasn't proceeded when it was revealed that all the bidders were linked to tax havens.
Tax havens, after all, don't do transparency.
This article first appeared in The Daily Telegraph.