housing affordability from urban developer’s perspective - stephen albin - urban development...
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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
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