ULI Sydney City Forum: The Australian Dream? Insights on the Australian Residential Market
Written by Lauren Bensadoun
ULI Sydney’s April City Forum took place on 10 April, sponsored by Aqualand, and focused on the Australian Residential Market. The Australian market is currently suffering from an over-supply of dwellings available which is causing weakened sales and dropping house values. Ben Hendriks of Mecone kicked off the evening with an insightful presentation and gave the opinion that there is a long-standing issue with housing supply in Sydney; The supply cycle is for long periods of under-supply intersected by short periods of over-supply.
The first factor that needs addressing is how the price to income ratio is making housing virtually unaffordable, especially to those who have yet to enter the market. Sydney is said to be the world’s second least affordable market after Hong Kong, although there are still large areas with relative affordability. However, this affordability comes with trade-offs such as longer commutes, less access to amenities and services (such as education and health services), amongst others. Interestingly, the areas that are suffering the most are those that are predominantly investor led while the areas that typically provide larger housing types or are owner occupied are holding up better than expected. Understanding that there are multiple sub-markets operating throughout Sydney, the question needs to be asked: Is there a disconnect between planning and housing markets? Sydney is a large, international city and should then be planned as such. Presently, most of the focus has been revolved around supply, but what exactly is causing the over-supply? An important discussion needs to be had around housing diversity and better transportation networks.
Sydney must diversify its housing market to accommodate for: Renters, students, seniors, families…etc. The diversity is also necessary as the market is continuously changing. Over the past 10 years there has been a major decline in the household occupancy rate from 4.5 to 2.6 people per household.
Furthermore, Sydney has done a poor job planning for the increased population growth in terms of the transportation networks. In 1981, London and Sydney had forecasted the same population for 2034, yet our transportation networks do not compare to that of London’s or most other international cities around the world. This is affecting the livability of Sydney and is ultimately contributing to the current over-supply in the market.
The evening then continued with a Panel discussion from Ben Hendriks of Mecone, Esther Cheong of AEC Group, Lisa Chilkarovski of Chikarovski & Associates and Daniel Khong of Capella Capital. Some key takeaways from this discussion are outlined below
· When looking at the data presented by Ben, it would be valuable to overlay the demographics in this data. There is a large number of Sydney residents that are retiring and leaving the city to get away from the business. Retirees are more interested in agricultural pursuits, saving money and having more land
· The younger demographics will move to places with more employment opportunities. The average person will commute up to 1.5hrs to get to work – but no more than that.
· It is imperative that we deal with “construction fatigue”, meaning project owners must make it a top priority to minimize the impacts on the community during construction projects.
· The “30-minute city” is not likely a reality for Sydney. Unfortunately, the city is far too behind in infrastructure and is in a constant state of catching-up. In order to become a “30-minute city” The government must be far more future-focused, rather than simply waiting until a problem arises.
· Diversifying the housing market in Sydney is key to future success. Currently, the market is heavily run by investor stock.
· From FOMO (Fear of missing out) to FONGO (Fear of not getting out). When the market is high, the public has a FOMO-type reaction. Fear of not getting into the “booming” housing market. However, in this current down-turn, FONGO is taking over as people are worried about not getting out fast enough. The media is hugely responsible for this and is causing a massive selling-frenzy by dramatizing the current down-turn in the market
The evening was insightful, and the conversations had both breadth and depth. The “Australian Dream” of owning a large house on a ¼ acre lot is not what is desired by the new generation. People are willing to give up bigger houses and land in exchange for a city that is liveable in today’s day and age. This means housing diversity, better transportation networks, and better communities. People will trade space for time. Furthermore, with regards to the current down-turn in the market, it is simply apart of an expected economic cycle. Economists are confident that the next “pendulum swing” will happen in the next 2-4 years where the market will be back in an under-supply. There is potential for investors to have massive returns if they can hold their nerve, not give into the FONGO, and hold onto their investments until this next pendulum-swing in the economic cycle occurs.
2019 ULI Australia Young Leader Scholarship
Each year the leadership of ULI Australia recognises the significant contribution of a ULI Australia Young Leaders Group member. The ULI Australia Young Leader Scholarship recognises this contribution by awarding the 2019 ULI Australia Scholarship winner with attendance at the ULI Asia Pacific Summit and Young Leaders Group Study Tour in Shanghai.
This year’s scholarship winner is Leo Mewing, a very active member on ULI Brisbane’s District Council.
Leo Mewing is an experienced town planner, and Director of Mewing Planning Consultants. Since commencing his professional planning career, Leo has accumulated extensive planning experience in both Queensland and internationally. Leo‘s key areas of expertise and interest are in preparing and managing development applications and in strategic land use planning, in both urban and rural settings. Leo is also a current expert witness in the Planning and Environment Court.
Leo has had a lead role in the preparation of various planning schemes, local plans and strategic planning documents for local government throughout Queensland. Leo has also enjoyed working on many major development projects throughout Queensland, including recent project experience extending to mixed-use, commercial, retail, entertainment, urban infill residential, greenfield residential, industrial and community developments.
Congratulations Leo, we look forward to seeing you in Shanghai!