Housing Affordability Summit 2015a developer’s perspective

Stephen Albin – December 2015

NSW population projections

2015 2031+ 1.1M

Natural

Increase

7.6M9.2M +900K

Migration

1.1M

Natural

Increase2031

Sydney figures alone…

• By the year 2036, Sydney will have 6 million residents

• 3 million people will live in Sydney’s west

• Sydney will require an estimated 770,000 new homes

The housing affordability conundrum

How much can

the average

“working family”

afford?*

HOUSE: $1,002,190

UNIT: $683,520

NOW 1% Rate Rise

• Based on mortgage repayments of 35% of median Greater Sydney household income.

Source: RP Data 2015 & 2011 Census

$284,000

$259,400

Sydney Median Dwelling Price

Have housing costs changed

that much?

In Sydney…

• Approximation calculated from ABS, Macquarie University and major banks’ data• Affordability index based on hh weekly mortgage repayments as a proportion of ave hh

earnings and median house prices

0

10

20

30

40

50

60

70

80

90

2000/ 2001 2002/ 2003 2003/ 2004 2005/ 2006 2007/ 2008 2009/ 2010 2011/ 2012

Affordability Index 2000 - 2012

State of the LandMetro Sydney Dashboard*

Q3 2015 Annual Change

Net sales per month 602 -22%

Median lot price $484,950 41%

Stock overhang (lots) 343 1%

Releases for the survey (lots) 1,985 0%

Median lot size (sqm) 450 0%

Median $ per SQM $1,078 41%

*National Land Survey ProgramStandard Market Performance Report 2015

Why are homes so unaffordable?

1. Strong Demand – due to

population growth, strong

investor activity and a low

interest rate environment

2. Short Supply – due to high

infrastructure costs, planning

constraints

A:

Q:

Foreign investment debate• Proposed investment in residential real

estate has increased: 2012-13 – $17.2 billion*2013-14 – $34.7 billion*

• Boosts dwelling stock and increases the number of properties in the private rental pool.

• It is unclear from available data what impact (if any) foreign investors actually have on prices, need to focus on supply side constraints.

*Foreign Investment Review Board Annual Report 2013/14

Population shiftHousing demands are changing

NSW Worker to retiree ratio

:5:12015

2030 3:1

39% of the population aged 50 + by 2050 (DPI)

Why are house prices so high?

Supply vs demand (Sydney)

75,000+

Current

Undersupply

12,500

Annual

Undersupply2020

Undersupply

2030

Undersupply

150,000

275,000

But aren’t Australian cities more densely

populated? Not even close.

People per square kilometre

Singapore

London

Tokyo

Paris

Los Angeles

Sydney

Melbourne

Brisbane

Perth

10,200

5900

4400

3800

2400

1900

1500

1000

1100

Can we use our space more efficiently?

Of course we can.

HK49

Average residential floor space per m2 per capita

CHINA65.5

108UK

115JAPAN

141FRANCE

237CANADA

253UNITED STATES

292AUSTRALIA

World

trends

• Push for higher urban

densities = population

outflow

• Long-term housing

affordability through

Government investment

in transport,

infrastructure, PPPs

Finding affordable housing

solutions Housing Diversity

575m2 430m2

2000/ 2011 2012/ 2013

The evolution of lot sizes

446m2

2014/ 2015

Finding affordable housing

solutions Housing Diversity

• Housing diversity package in NW & SW growth areas (eg Oran

Park, Ropes Crossing) will help

$230,000$413,000

Finding affordable housing

solutions Compact Housing

• Move towards creating more terraces, townhouses and higher

density dwellings

Crace Urban Precinct Canberra. Lot sizes 55-172m2

30 Dwellings p/h

OTHER SOLUTIONS – reducing

affordable housing delivery blockages

• Introduce effective planning reforms

- Red tape, unnecessary duplications all levels of

Government.

- Delays and highest fee cost per block = unviable/ abandoned projects

• Faster approvals for development that ticks all

the boxes ie extensions and standard housing delivery projects

• Strata Reform - Renewal of older strata units

• Less politics - Big picture lost

Greater Sydney Commissionhelp or hindrance?

Has the capacity to increase investor confidence, and create more housing if it:

• Drives a consistent vision

• Adapts a world best-practice approach

• Expands the proposed jurisdiction

• Has teeth (planning and approval powers)

The path to change

A common sense approach …

1. Effective Planning Reforms

2. Effective community consultation

to highlight the need for growth

3. GSC + metro/ regional strategies

that facilitate more new housing

4. Council amalgamations

5. Government action for the

greater good, not pressure from

vocal opponents

Demand Federal

Supply State

Approval Local

Urban Development Institute of Australia NSWABN 43 001 172 363

11th Floor66 King StreetSYDNEY NSW 2000

DISCLAIMER OF LIABILITY

While every effort is made to provide accurate and complete information, UDIA NSW does not warrant or represent that the information in this presentation is free from errors or omissions or is suitable for your intended use. The information provided in this presentation may not be suitable for your specific situation or needs and should not be relied upon by you in substitution of you obtaining independent advice. Subject to any terms implied by law and which cannot be excluded, UDIA NSW accepts no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in information in this presentation. All information in this presentation is subject to change without notice.

Stephen AlbinChief Executive Urban Development Institute of Australia UDIA NSW T: 02 9262 1214 M: 0431084651 E: salbin@udia-nsw.com.au W: www.udia-nsw.com.au

Like what you see?Be part of our conversation.

informa.com.au

Join our e-newsletter