HOW can building more apartments make property cheaper … from what we have seen so far?
With the AUSTRALIAN HOUSING BOOM particularly in NSW, Victoria, South-East Queensland, and major capital cities including Hobart from as early as 2013 to 2017/18 and again from late 2019 to date house prices skyrocketed … was this because the supply was unable to meet ‘the foreign demand’?
WITH so much overseas competition for our domestic housing … * Temporary Visa Holders lured by a ‘Permanent Resident Visa’ and Medicare benefits … and our Housing Market awash with ‘Hot Money … *a whole Cohort of Australian First Home Buyers have been locked out …
WHO are calling for more units and apartment blocks?
IS it developers, the Property Council of Australia, the Urban Taskforce, the economists helping to shape public policy, to help tackle and address issues such as urban renewal and precinct planning?
CAAN will focus on the interview comments from NICKI HUTLEY a Partner, in Deloitte Access Economics … helping to address urban renewal and precinct planning ... Ms Hutley said:
Photo: Nicki Hutley; abc.net.au
‘The population mix of Australia has changed dramatically * and there are a lot of people who have come from Asia who are used to apartment living, who are quite happy with that.’ …
‘Land is incredibly expensive particularly in Sydney and Melbourne, and we need therefore to build more dense environments. Density has all these fantastic benefits. It’s actually great for communities, it’s better for the environment, it reduces our footprint. It lowers the cost of infrastructure, it creates stronger communities.’
The suggestion that density particularly high-rise development is better for the environment is readily disputed in the report of Jago Dodson ‘The Carbon Devil in the Detail on Urban Density’
AND No. 1 CO2 Emitter … CHINA
With the world’s largest population and for decades one of the fastest growing economies, China is far and away the world’s top CO2 emitter.
Xi having driven millions of Rural Chinese to be urbanised in high-rise precincts of cement, glass and steel emitting CO2 !!
CAAN has shared numerous reports with you from the Unconventional Economist and others about how the cost of infrastructure has become prohibitively expensive with land buy-backs and tunnelling , and reports of isolation with higher density …
GEOFF THOMPSON, REPORTER: Confronted by unaffordable house prices, more Australian families are embracing the high-rise life.
What do you think of property prices in Australia?
DIPDI JOSEPH: Crazy high.
ROMEL JOSEPH: Can we be very honest? Ridiculously high.
GEOFF THOMPSON: Dipdi and Romel Joseph chose an apartment in the northern Sydney suburb of Hornsby as their first home.
They’re new parents and new Australian citizens.
ROMEL JOSEPH: More and more people coming into Australia. They will start, definitely they will with the apartment because that’s more affordable.
We are used to living in apartments. So yeah, it serves the purpose.
We are suggesting our friends, and I’m sure if they come into an apartment, they’ll suggest other friends to come into an apartment.
BRIAN WHITE, JOINT CHAIRMAN, RAY WHITE GROUP: We’re finding more families in home units. Once that would have been unheard of. A home unit would be for adults, almost adults only.
Now families are living in units and obsession about big backyards is diminishing.
NICKI HUTLEY, PARTNER, DELOITTE ACCESS ECONOMICS: The population mix of Australia has changed dramatically and there are a lot of people who come here particularly from Asia who are used to apartment living, who are quite happy with that.
STEPHEN KOUKOULAS, ECONOMIST: In another year Australia is probably going to have another 400,000 people. They have to live somewhere and unless we’re building enough houses, they’re going to be pushing up rents and house prices with it.
GEOFF THOMPSON: Romel and Dipdi dream of owning a house here one day.
ROMEL JOSEPH: At the moment it’s definitely and comfortably a home for us.
GEOFF THOMPSON: And you hope it makes you some money so you can upgrade later?
ROMEL JOSEPH: Yes, definitely and we know for a fact that this apartment, the moment we bought it, it increased in value.
NICKI HUTLEY: Land is incredibly expense particularly in Sydney and Melbourne and we need therefore to build more dense environments.
Density has all these fantastic benefits and it’s actually great for communities. It is better for the environment. It reduces our footprint, it lowers the cost of infrastructure.
It creates stronger communities.
GEOFF THOMPSON: Rising out of the ground at Sydney’s Olympic Park, this looks like any other new apartment block.
Why is this development significant?
ADAM HIRST, MIRVAC BUILD TO RENT: In our view build-to-rent works all over the world and build-to-rent is something that Australia needs.
GEOFF THOMPSON: Let’s have a look inside.
Just as it sounds, build-to-rent is designed specifically for long-term tenants.
What’s a place like this rent for?
ADAM HIRST: One bedrooms will start from around $500, two bedrooms around $600 and three bedrooms around $850.
GEOFF THOMPSON: What makes living here different is you can choose the length of your lease.
PETER HARRIS, CHAIRMAN, PRODUCTIVITY COMMISSION (2013-18): It is common overseas.
We do see housing stock of this kind readily available, continental Europe and the US.
We just don’t see it here.
ADAM HIRST: The most important thing is maintaining occupancy and keeping our residents in here happy and for as long as possible.
GEOFF THOMPSON: The owners of build-to-rent developments are typically institutional investors, such as big super funds.
While it’s proven overseas, the future of build-to-rent in Australia is uncertain.
Mirvac is lobbying state and federal governments to change the way build-to-rent projects like this are taxed.
ADAM HIRST: Without some change from a government standpoint, this sector won’t reach the scale it needs and it will not take off as a viable option in Australia.
FELICITY EMMETT, ECONOMIST, ANZ: You know, that’s something that government policies can help support in terms of taxation arrangements as well and it is something various levels of government are going to have to look at more carefully so that we can supply affordable rental housing, particularly in the major cities and in the inner and middle rings.
GEOFF THOMPSON: So when does this finish?
CHRIS HARPUR: I think it has a year or two to go.
There’s a frustration to see how the suburb has developed and traffic around here is bad enough as it is. I know it’s not the only suburb but it is just not good.
GEOFF THOMPSON: It’s big, isn’t it?
CHRIS HARPUR: It’s huge. Wait till you see down the front.
GEOFF THOMPSON: Seventy-two-year-old Chris Harpur fears new apartment blocks will ruin his inner Sydney suburb of Alexandria.
CHRIS HARPUR: I’d like to see how the area goes where we’re living in Alexandria in the next 12 to 24 months.
There’s a lot of development which is encroaching.
BRENDAN COATES, GRATTAN INSTITUTE: The fundamental problem is that people don’t want more density in the suburb in which they live.
So it’s ultimately the politics of NIMBYism (Not In My Backyard) that is stopping us from building more housing, getting more density and ultimately allowing many Australians to pursue the Australian dream and have their own home.
GEOFF THOMPSON: Like many of his generation, Chris Harpur reaped the profits of the property boom.
His Alexandria terrace house has doubled in value since he bought it in 2008.
CHRIS HARPUR: I get the flak. If only it had happened, you people were lucky, you baby boomers and all that sort of stuff.
But gee, you know, I have worked quite hard in my life and I deserve to be able to do that.
Nobody knew that house values would go skyrocketing.
GEOFF THOMPSON: Chris was a self-funded retiree before the value of his shares was cut to pieces by the global financial crisis.
He now gets a part-pension while still owing $300,000 on his house.
CHRIS HARPUR: Having a mortgage in retirement was a bad decision. There’s absolutely no doubt about that.
There’s that old saying about being asset rich and cash poor, and I think that affects a hell of a lot of people.
GEOFF THOMPSON: Chris has decided to use the equity in his home to help fund his retirement.
He’s doing it with the newly expanded Pension Loan Scheme – a reverse mortgage backed by the Federal Government.
CHRIS HARPUR: I have more cash on a monthly basis. The money that comes from the Pension Loan Scheme quadruples.
My current cash flow is going to be amazing in the sense of having the flexibility with say the mortgage and stuff like that.
GEOFF THOMPSON: Chris won’t have to repay the government loan until his house is sold.
CHRIS HARPUR: I wouldn’t recommend it to people who didn’t have sufficient equity because you could chew it up very quickly as well and end up with basically having to sell the home anyway.
BRENDAN COATES: The Pension Loan Scheme is actually one of the best policy initiatives I think we’ve seen from government in the last 15 years because there is a clear need to get older Australians to use the equity in their home to have a higher retirement income.
We can’t continue to have such a large asset as housing sitting on retirees balance sheets and then not touch it at all to help fund their retirement and ultimately give them a better retirement than the one they could otherwise have.
GEOFF THOMPSON: Not all baby boomers cashed in on Australia’s property bonanza.
Some, like Belinda Webster, have had little choice but to rent most of their lives.
BELINDA WEBSTER: Rents are so expensive almost everywhere. I mean, I know Sydney rents pretty well. There’s no way I could afford to live in Sydney anymore.
GEOFF THOMPSON: Belinda was an award-winning record producer but it was never a lucrative career.
BELINDA WEBSTER: If I defined success in my life as earning money, I would have failed miserably.
That was really a subsistence income. I mean I couldn’t even afford to go overseas let alone buy a house. It was just not even on the radar.
GEOFF THOMPSON: At 67, Belinda’s been on the age pension for two years now.
Only recently, when her father died, that she inherited enough money to buy her first home.
BELINDA WEBSTER: Look, I’ve envied people who have been able to buy their own houses, that’s for sure but it’s never been a possibility for me.
So it’s not something that I was kind of expecting to be able to do and here I am in my first house for the first time in my life.
GEOFF THOMPSON: Her house is a demountable she bought for $280,000.
BELINDA WEBSTER: I feel great about being here because it’s a nice small size. It’s in a really beautiful location.
It’s where I want to be in the world.
GEOFF THOMPSON: It costs Belinda another $100 a week to rent a space at caravan park in Kangaroo Valley, two hours’ drive south of Sydney.
BELINDA WEBSTER: The aged pension is not anything to be aiming for in life as your means of survival because rents are really expensive.
So if people are single, if they don’t have very good jobs that pay them a lot, or if they’re living on welfare, or on the pension, there’s just no way they could afford it.
So I’m actually surprised there aren’t a lot more homeless people around.
NICKI HUTLEY: What we need to do is have affordable shelter.
So whether that’s home ownership, whether that’s rental accommodation that is affordable and that is stable, something that Australia is well behind the eight-ball on, there are other solutions.
So I wouldn’t want to be, people to think home ownership is the only answer. We need to think about this as a much bigger picture.
GEOFF THOMPSON: The time has come to reshape the Australian dream of home ownership into one we can all believe in.
BRENDAN COATES: So three decades ago your chances of owning your own home were roughly the same whether you were wealthy or poor in Australia.
Fast forward to today and home ownership is really, really dependent upon your income.
Home ownership is crashing amongst the bottom 40 per cent by income and also amongst younger Australians and it does mean that increasingly your ability to own your own home depends as much on who your parents are as whatever endeavours that you go about in your own life.
FELICITY EMMETT: Do we want to become a society where owning your own home depends on who your mum and dad are?
And I think that is the way that things are going at the moment.
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Sydney’s Green Square will be the mostly densely populated place in Australia by 2030, with 22,000 people per square km.
Image: City of Sydney