PROPERTY - Australia and New Zealand Property Journal
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
FLOOD RISK MITIGATION CITIES OF THE FUTURE MEET THE NEW CEO
COMMERCIAL PROPERTY AT RISK HOW WE LIVE IS CHANGING API’S NEW CEO
PROPERTY
AUSTRALIA AND NEW ZEALAND
JOURNAL
March 2018 Vol. 7/No. 1
FUTURE
OUTLOOK
WHAT LIES AHEAD?
THE OFFICIAL JOURNAL OF THE AUSTRALIAN PROPERTY INSTITUTE
API Career Centre
Webpage and Email Listings Now Available
Are you looking for the As part of the API's service to our Members,
API Members can post their advertisements to the
best quality candidates API Career Centre webpage free of charge. For
in the property industry? non-members, we charge very competitive fees which
gives you direct access to the API's membership.
Our Career Centre As an added bonus, all advertisements listed on the
webpage and email API Career Centre website will be included free of
charge in a monthly email to API Members and API
services are available non-member Subscribers. That means over 16,800
to any firm or individual people will receive your job ad in their inbox.
looking for staff. Still looking for more impact? Premium listing options
are also available.
For more information visit the
Australian Property Institute Career Centre
www.api.org.au
MO
COMRE D
RISK MANAGEMENT ING ETAIL
SOO S
MODULES 2018 N
The API Risk Management Modules (RMM) are revised The module will have a fresh format, with online pre-workshop
every three years to keep up-to-date and relevant to preparation and post-workshop assessment, an interactive
members. face-to-face workshop (or online equivalent for those who are
unable to attend a face-to-face session).
API and DLA Piper are developing the new version for 2018.
This is based on feedback from members on the 2015 module,
recent legal history, and changes in risk management practices. For questions please contact
education@api.org.au.
www.api.org.au
NEW SOUTH WALES YOU SEC
R P URE
LAC
COUNTRY EN
OW
CONFERENCE
4-5 MAY 2018
NEWCASTLE
www.api.org.au
CONTENTS
MARCH
2018
TH IS ISSUE
19
COVER STORY:
CITIES OF THE
FUTURE
8 10 32 52
REGULARS BUILD TO RENT SPENDING BIG
8 API CHAIR’S REPORT 32 BUILD TO RENT 52 INFRASTRUCTURE
Australia’s missing sector H
ow generational spend
10 API CEO’S REPORT on infrastructure is
changing the east coast
56 LEGAL NOTEBOOK
Recent cases, headline issues,
and new legislation
002 ANZPJ MARCH 2018
FEATURES
16 WILL THE BUBBLE BURST?
Paul Bloxham talks Australia’s economic future 14 TECHNOLOGY OF TOMORROW
45 FLOOD RISK MITIGATION
Mitigation of commercial properties at flood risk 38 UNDING PROPERTY DEVELOPMENT-
F
WHERE TO NOW?
30 TECHNOLOGY & SECURITY TRENDS
FOR 2018 22 HOUSING AFFORDABILITY-IS THERE RELIEF
IN SIGHT?
43 PROPERTY EXCHANGE IS NOW PAPERLESS
68 FIRST HOME BUYERS BEWARE
43 70 I NDUSTRY NEWS, MOVERS & SHAKERS
003
THE AUSTRALIA AND NEW ZEALAND PROPERTY JOURNAL EDITORIAL COMMITTEE
COMMITTEE MEMBERS
All submissions to the Australia SEAN VENTRIS AAPI
and New Zealand Property Journal Sean Ventris is a corporate
are reviewed by the Editorial lawyer with CSR Limited
where he heads up the in-
Committee. This group is made house legal team, which is
up of experienced professionals, based in Sydney. Mr Ventris
has specialist expertise in M&A, commercial
academics, educators and journalists property, corporate and commercial negotiation,
who contribute their expertise dispute resolution, and corporate strategy.
In addition, Mr Ventris has specialised in the
to ensure content is valuable to property, environment and major projects fields.
members of the Australian Property
Institute (API) and the broader
property profession. DR MICHELLE GLASTRIS AAPI
Dr Michelle Glastris is an
investment specialist with
more than 20 years’ expertise
in global property and
infrastructure investment, funds
management, research and advisory. Her career spans
senior management roles with the City of Sydney, UBS
Global Asset Management, CBRE and Property Council
of Australia. Dr Glastris has a strong interest in urban
development, strategic planning and the investment
and development performance of cities.
004 ANZPJ MARCH 2018
EDITORIAL COMMITTEE
IAN FLYNN FAPI PROF CHRIS EVES AAPI
Ian Flynn is a senior property Professor Chris Eves is the
valuer with more than 33 years’ Deputy Head of School, Property,
experience in the government Construction & Project Management
and private sectors. Having and the Professor in Property at
worked in various states as a RMIT University. He has worked as
rural valuer, he now operates as an institutional a senior lecturer at the University of Western Sydney,
property manager in Melbourne. An API member as Professor of Property Studies at Lincoln University,
since 1977, Mr Flynn has participated in state Professor in Property Economics at QUT, and has
councils, API boards, committees and panel roles also been employed with the State Bank of NSW in
over the last 15 years. valuation, rural lending and credit administration.
MARTIN BREGOZZO FAPI ANDREW BELL
Martin Bregozzo is a property Andrew Bell has experience across
economist and valuer with some the API’s operations at a state
20 years’ experience across both level having worked for the API in
the private and public sectors. He Queensland for 20 years covering
commenced his career with the communications, events, finance
Federal Government as a valuer, and Board management. Mr Bell holds a Bachelor of
before specialising in project feasibility, economic Business (Communications) with a major in Journalism.
modelling, and expert advice. Martin currently He was promoted to the role of Queensland Executive
manages his own consultancy, is member of the Officer in 2008, which he held until becoming National
Australian Property Standards Committee, and lectures Manager – Communications last year. He is also the
part time at the University of Technology, Sydney. Member Services Manager in Queensland.
005
PUBLISHER PANEL API BOARD
Australian Property Institute Limited Chair API Ltd Directors
6 Campion St, Deakin, ACT 2600 Tyrone Hodge AAPI Dan Cregan, Diana D’Ambra,
Mark Kay fapi, Anne-Maree Moussa AAPI,
API Postal Address Chair APIV Ltd
Timothy Rabbitt AAPI, Garrick Smith fapi,
PO Box 26, Deakin West, 2600 Robert Hecek LFAPI
Robert Smyth fapi, Joseph Stansfield aapi,
Michael Leech aapi (Observer).
Editor: Vanessa Mitchell
API NATIONAL LEADERSHIP TEAM
Creative: Hillary Jayne
Chief Executive Officer Amelia Hodge National Manager – Professional Standards
President and Publisher: Barbara Simon David Brandon AAPI
Chief Operating Officer & Company Secretary
Nick Langley National Manager – Membership Services
& Advocacy
EDITORIAL COMMITTEE National Manager – Communications
Andrew Bell Mel Nelson
• Dr Michelle Glastris
National Manager – Education
• Prof Chris Eves Rupert Grayston
• Sean Ventris
• Ian Flynn PRODUCED BY
• Martin Bregozzo IDG Communications for the Editorial
Australian Property Institute. vanessa_mitchell@idg.com.au
• Barbara Simon
Advertising
• Andrew Bell
communications@api.org.au
Ph: +61 7 3832 3139
CONTRIBUTORS Level 10, 15 Blue Street, Subscriptions
North Sydney, NSW 2060 journal@api.org.au
Mary Branscombe, Faith Chan, Lisa Ph: +61 2 9902 2700 Ph: +61 2 6282 2411
Claes, Amelia Crawford, Greg Dickason,
Peter Faludi, Cameron Kusher, Jessica
Lamond, Tim Lawless, John Leiseboer, The Australia and New Zealand Property Journal is published by the royalty, slander, unfair competition, trade practices and any violation of
Australian Property Institute (API) for the members. the rights of privacy.
Paul McKenzie, Niall McSweeney, The Publishers invite authors to submit articles of interest that Authors, contributors and advertisers warrant that the material
Vanessa Mitchell, James Morse, George further professional practice in the property industry. Articles of 500 supplied complies with all laws and regulations and that publication of
to 5000 words will be considered. Guidelines for authors are available the supplied material will not give right to claims of liability or are being
Nott, Leon Spencer, Leigh Warner, Sara from the Publishers. capable of being misleading or deceptive or in breach of respective laws
Wilkinson. The Publishers reserve the right to alter or omit any article in all States and Territories of Australia and New Zealand.
or advertisement submitted. Authors and advertisers indemnify the At times, the Australia and New Zealand Property Journal
Publishers and Publishers’ agents against damages and liabilities that publishes technical material to assist professional practice as supplied
may arise from the published material. by authors and 3rd party sources. The Editor accepts no responsibility
Advertisers, advertiser agents and representatives lodging for the expressions, opinions, outcomes or effectiveness of formulas
material with the Publishers indemnify the Publishers, its servants, staff or calculations contained in those articles. Readers should seek
and agents against all claims of liability or proceedings in relation to independent, specialist advice on matters concerning business
defamation, trademark infringement, breaches of copyright, licences and practice, financial outcomes and legal implications.
IDG Communications Pty Ltd (IDG) is the publisher of this magazine on behalf of the Australian Property Institute.
If you choose to accept offers, enter competitions or complete surveys contained within the Journal you may be required to provide information about
yourself to the Australian Property Institute who will use this information to provide you with products or services you have requested, and may supply
your information to contractors that help IDG and the Australian Property Institute to do this. Unless you tell us not to, IDG and the Australian Property
Institute may also use your information to inform you of other products, services and events, or give your information to organisations that are providing
special prizes or offers and that are clearly associated with the offer. For information on how the Australian Property Institute respects and protects
your personal information, and how to change your privacy preferences please contact the API Privacy Officer by emailing national@api.org.au
006 ANZPJ MARCH 2018
EDITORIAL
LETTER FROM
THE EDITOR
W
elcome to our our professions is key to remaining
first issue of the relevant, employable, and marketable
Australian and in a changing world.
New Zealand Of course, everyone’s curious
Property about the residential property
Journal for 2018! market and what 2018 will bring,
This issue’s theme is ‘Future after two years of massive increases
Outlook’ and we have many amazing in dwelling values in Melbourne and
articles from experts in their Sydney, leading to challenges around
fields about Australian property, affordability and the fading of the
technological innovation, big data, ‘great Australian dream’.
and how all these significant changes In this issue of the Journal,
might interact over the coming various experts weigh in on the
months and years. future of the housing market and
There is no doubt it is a time discuss not only the possible bursting
of rapid transformation in ours and of a bubble but, in fact, if there is even
other industries across Australia and a bubble at all at a time when demand
the world, and as much as we’d like is still barely being met by supply.
to have a crystal ball so we might As always, you are welcome
better prepare for what’s coming to submit your own articles to
at us, there is no telling what the me at vanessa_mitchell@idg.com.au
future might bring. for inclusion in upcoming issues.
Agility is the key for all The API absolutely welcomes
industries, as technology evolves any informative submissions
so rapidly, thanks to machine readers will find pertinent to
learning and artificial intelligence, the property industry.
it is almost outdated before it is
released. Developing new ways of
incorporating technologies into Thank you, and happy reading!
Vanessa Mitchell
007
API NEWS
CHAIR’S
REPORT
API Chair, TYRONE HODGE,
looks forward to an innovative
and exciting 2018.
008 ANZPJ MARCH 2018API NEWS
2
018 has come along
quickly and brings
with it many challenges
WE ARE NOW CALLING FOR
for our profession, NOMINATIONS TO THE BOARD
not only in terms of
a softening property market, but
also in terms of rapid technological of other professional groups. It is positions available on the Board, and
change, which has the potential to through increased membership from eligible API members can nominate
impact the way we do business. experts and professionals that we can regardless of the State they reside in,
Looking forward is the theme ensure the API remains the leading as the Board represents all members.
of the first Journal of 2018, and we industry body in the property space. Within this election process,
have many opinions from experts in With this in mind, the RICS we’re looking to ensure we get greater
their field about how these various alliance has now been signed. This is diversity on the Board, both in terms
issues will impact the property sector a highly exciting and valuable alliance of gender diversity, and also in terms
moving forward. The Journal is for API members. It will see us start to of professional background.
just one of the benefits we offer our align the two limited liability schemes, Anyone who’d like to have a say
members, and as we settle into this and we’ll also start rolling out the on how the API can better serve its
New Year, there are various exciting RICS Valuer Registration as part of members and how they’d like to see the
and innovative programs happening that process in the first half of 2018. API move forward into the future should
within the API for the further One of the numerous benefits consider a nomination. We’d encourage
advancement of our members. to members this alliance brings is all people who meet the criteria to put
Amelia Hodge is our new CEO. it will give API members a single their names forward for consideration.
She commenced her role in January standard that is recognised by A dynamic and diverse Board ensures
following the planned exit of Mike international players, and from a the API stays relevant to its members.
Zissler, and the API would like to consumer perspective they will know Of course, 2018 will be a challenge
warmly welcome her to the position. API and RICS Valuers are working in terms of the property market outlook
Amelia brings to the API over to the highest possible standards. Of and, as always, our priority will be
25 years’ experience leading and course, this has always been the case, to provide appropriate support to all
contributing to corporate business but this alliance further cements our members. We will be ensuring
performance in both executive and this moving into the future. we keep up with current legislation,
non-executive directorship roles. In exciting news, we are now market changes, trends, and technology
As we move further into the calling for nominations to the so members can be prepared for any
year, we’ll be looking to grow the Board, with the election process and all impacts these changes will
membership base into new segments underway this month. There are four have on them professionally.
009API NEWS
THE
CEO’S REPORT
API’s new Chief Executive
Officer AMELIA HODGE
updates members on what’s
to come in 2018 and beyond.
010 ANZPJ MARCH 2018API NEWS
I
am so pleased to be the new CEO the opportunities that lie ahead.
of the Australian Property Institute, IT’S BOTH AN My role, in addition to delivering our
and very excited about this career EXCITING AND National Board’s strategic agenda, is to explore
opportunity. Our Board, a group of CHALLENGING the potential to advance our profession on
diverse, nationally and internationally TIME WITHIN a national and international scale, and to
experienced property professionals, is THE PROPERTY develop relevant products, services, standards,
especially supportive and focussed on PROFESSION and advocacy opportunities that benefit our
delivering the API’s strategic intent. members and the property profession as a whole.
I have been fortunate to attain this We have a number of priorities to advance
exciting role, one that plays to my property over the coming couple of years, including:
passion, something that has been at the
centre of both my career and my personal 1. S coping our API Research Trust
interests from the very early days. membership engagement project;
It’s both an exciting and challenging 2. Expanding our membership categories,
time within the property profession, one that value proposition, and service offerings;
contributes so much to the Australian economy. 3. A dvancing the API advocacy agenda in
We are having more conversations both a proactive and reactive sense;
these days around issues, both internal and 4. R eviewing and improving our
external, that face the property sector. In learning and professional development
addition to economics, employment and programme and delivery platforms;
its regulation, topics are now being openly 5. R eviewing and working with the
discussed such as gender, disability and cultural Professional Standards Council to improve
diversity, the Male Champions of Change upon, modernise, and advance standards
programme, the #metoo movement, the work within the property profession; and
of Reconciliation Australia, job security, and 6. S upporting and gaining improved
the future of work in the technological age information flow from our actively
of disruption. These conversations are being engaged State committees and
held in the public arena, the boardroom, and regional discussion groups.
in an organisational context, and it will be
interesting to see how our industry, and our The biggest challenge is aligning our
property professions, evolve through these. agenda with our resource constraints and
Opportunities for cross sector experience prioritising those opportunities that present
have increased over time. The consolidation of the highest return yields, both in terms of
smaller property practices with larger national relevance, value, impact, and dividends.
and international organisations provide a vast However, given the immense pool
range of career options, something that was of talent available within the API, not to
not so prevalent in Australia in the past. mention our Board, State Committees
I very much look forward to embracing and the expertise of our members, I have
opportunities to engage with and serve no doubt we will meet all these challenges
our members nationally, to work with and more as we move into the future.
our international standards partners 2018 should see the commencement
to improve professional standards, and of the above work, with delivery
to respond to both the challenges and staggered over 2019 and 2020.
011CORELOGIC
BIG DATA ON TRACK
TO DRIVE BIG
BUSINESS IN 2018
It’s in a fast-changing environment that data really gets
the opportunity to shine, says CoreLogic International
CEO, LISA CLAES, with the insights it generates having
the potential to deliver true customer value.
2
017 was a year of 1. DATA-INFLUENCED SOLUTIONS present an accurate insurance quote
curve balls, contrasts Our daily conversations are so often for their customers.
and contradictions. peppered with terms such as digital, In 2018, we should be seeing this
The housing market data, and analytics we almost take trend permeate further into other
continued to deliver for them for granted. We know what they industries and drive change in the way
sellers, with capital gains reaching mean, but are we really using them businesses operate.
their peak in the first six months to their full potential? The next 12 Automated Valuation Models
of the year. On the flip side, a late months will see businesses put this (AVMs) will continue to be a viable
year slowdown in property growth hypothesis to the test as they explore and valuable collateral valuation tool.
created emerging ambiguity for new ways to boost customer loyalty. Improvements in data availability
homeowners, hope for homebuyers, 2018 will be about data recognition and modelling techniques continue to
and cause to pause for many investors. and also data execution. The focus will deliver solutions to value appropriate
All this has taken place against move to applying insights effectively properties to expedite lending, while
a backdrop of regulatory change, and acting on opportunities to supporting Valuers as they continue
increased housing supply juxtaposed impact business growth. Retailers to demonstrate their expertise in
against affordability challenges, and in particular have been using data property valuation, particularly on
a steady cash rate. It was a period of analytics to influence buyer behaviour more complex property transactions.
stability and also fluctuation. for quite some time, through tracking
In the absence of certainty, data is our shopping preferences, predicting
showing its true worth by providing a our future needs, and presenting us 2. RETHINKING COMPETITIVE
modicum of reassurance to those who with tailored solutions, but it has ADVANTAGE
are privy to the insights it provides. since delivered customer value in It’s a sign of the times that customers are
During periods of ambiguity, data other sectors. becoming more ‘slippery’ and less loyal.
is an increasingly powerful tool that For example, Cordell Sum Sure They want easy access to a multitude of
can aid decision-making and assist has made it easier for homeowners products and services and an end-to-end
with mental preparedness. So how to insure their property, through experience that delivers ease, control and
will it influence the way we do marrying CoreLogic property price time savings – all through a user-friendly
business in 2018? data with other property attributes to digital interface.
012 ANZPJ MARCH 2018CORELOGIC
In 2018, we’ll see businesses 3. LEADING WITHOUT BORDERS how to get the best out of them. For
re-baseline the way they achieve With customer preferences and the younger generation, it’s less about
competitive advantage, and change behaviours in a constant evolutionary money, and more about the diversity
their operating models in response to process, business leaders will need to of experience, something that can be
customer behaviours. The rise of digital adopt a similar pace and style to meet achieved by adopting a more fluid
platforms, such as Airbnb, will offer a challenges head on. operational model.
one-stop-shop, while at the same time In 2018, more businesses will While executing in ambiguity
delivering choice. To be considered by recognise the need to adopt their appears to be a theme that will run
customers, businesses will increasingly clients’ goals as their own – from throughout 2018 and beyond, it would
need to partner with others. having shared KPIs to re-organising be remiss of us to underestimate the
Insights show that differentiation the organisational structure to suit value data can provide in being a
lies in the customer experience. We’ll whatever customer challenges need steady constant throughout. Having a
be seeing more automation, such as to be addressed. From a leadership crystal ball in business may have been
pre-filled forms, which make it easier perspective, it will involve greater a pipe dream years ago, but data has
for customers to proceed, we’ll see agility, and getting your team brought future predictions of trends
a simplification of processes to save comfortable with less structured and behaviours closer to reality.
customers’ time, and we’ll see increased ways of working. Creating new
transparency in the way businesses teams quickly to execute projects,
operate to generate customer advocacy. and disbanding them quickly once 2018 WILL BE ABOUT
Successful companies will be the project is completed need to
DATA RECOGNITION AND
those that invest in the experience – become the norm. Chances are people
by looking at the data, recognising won’t stay in one role for an extended ALSO DATA EXECUTION
patterns and knowing how to create period anymore.
customer value. It’s within these To facilitate this way of working,
realms organisations will be sowing leaders will need to develop an
the seeds for growth in 2018, with the increased sensitivity to their talent
expectation competitive differentiation pool. They will need to recognise
will flourish. how people like to work, and consider
013TECHNOLOGY OF TOMORROW
TECHNOLOGY OF TOMORROW
David Alam from National Drones and Luke Brannelly from V2i,
gave attendees at API’s National Conference a glimpse into the
future of property. VANESSA MITCHELL reports.
A
s drones and virtual are being implemented, with one “Drones are currently used in
reality (VR) change passenger per drone. There is also property surveying and 3D modelling.
the way we plan, transit-oriented development being Drones have been a boon for
develop, approve, theorised, where autonomous hover surveying the construction process,
and sell property, drones pick up passengers and deposit because they not only take images,
David Alam from National them at transit stations. they measure volumes, and heights
Drones, and Luke Brannelly from “Of course, delivery drones are via photogrammetry. This has been
V2i, spoke to attendees at the already a reality in some countries. fantastic for planning, and display
recent National Conference about So how are millions of drones in the for selling. Drones can also be used
technology and how it will change sky controlled by humans going to for land divisions, and for planning
the way we all do business. work? In the future UTM (traffic construction. People can see what
“While there are still no flying management systems) will be used a development is going to look like,
cars or hover conversions, as we’d all and affect all commercial drones. Each in high definition, before the plans
hoped there would be by now, it’s not drone will have a transponder, and this are even drawn up. We can even use
all science fiction,” David said. will require lot of technology for this drones for recording details, and
“Flying drone taxis in Dubai to be coordinated and safe. for recording details at height for
014 ANZPJ MARCH 2018TECHNOLOGY OF TOMORROW
PLANNERS CAN SIT IN THE OFFICE AND VISIT
A SITE WHEREVER THEY ARE IN THE WORLD
AND MEASURE SOMETHING IN REAL TIME
maintenance purposes,” he said. layer in any existing or new information and impact the surrounding
Luke, a passionate planner, detailed from plans, drawings, etc., so everyone area, or how riding on a bike path
how virtual reality is improving can see and understand all the relevant might look.
decision making and enabling information, at the same time, in real “In terms of property development,
improved collaboration at every level of time. VR allows us to walk around it is a total game changer. VR leads us
the development process. and understand planning and design to self-discovery; users can walk
“At V2i we facilitate development outcomes from where it is important: around the space, understand, and
from vision to implementation using on the ground. discover what is important to them.
easy to use ‘plug and play’ virtual reality “We can then layer on any Sales experience can be very tailored,
software that anyone can use,” he said. information we need, such as contours, and offer specific, accurate views from
“The technology is being used slopes analysis, shadows, concept the kitchen or living area before
across the industry, in some 200 layouts and building designs, then sit something has even been built.
projects to date. As a planner, VR offers with the audience and explore and Measurements can be uploaded in
a tremendous opportunity to reassess understand the project at any stage in real time, and even furniture can
our assessment, approval, community the total project life cycle. VR can be be placed.
consultation, and stakeholder used as a design review, collaboration “This is self-contained software that
engagement processes. and decision tool for planning and can be downloaded. It’s not specialised,
“The industry is full of reports that design consultants, councils and you don’t need a qualified operator,
don’t get read, and drawings that aren’t authorities, developers, purchasers, and anyone can use it. As you can
understood. VR changes all that. All vendors and more. see, VR is far more powerful than a
the tech you need can sit on a laptop. “When it come to processes like report or a drawing. It can provide an
This visually-based smart technology community consultation, or statutory immersive 3D experience of a solution,
provides for a more informed requirements, VR can help all providing all stakeholders, whether
discussion and more informed stakeholders see how a development technical or non-technical, with one
decisions to be made easier and faster will actually look, and to help them common visual language, enabling
for all involved. understand not only the impact of a true sense of presence and a better
“Planners can sit in the office and a development, but importantly the spatial understanding and awareness
visit a site, wherever they are in the good design outcomes and benefits, of things, and this can save months
world, and have a look at how high many years before they are built. The and possibly years in the approval and
something is, or measure something in experience can be detailed and refined design process.
real time. Think of the costs involved in through the development life cycle, to “VR and visually based start
site visits alone that could dramatically suit every stage of the project. They can technologies are changing this industry
reduce. Using this technology we can see every detail, such as how trees grow forever,” he said.
0152018 OUTLOOK
WILL THE
‘BUBBLE’ BURST?
API members enjoyed a glimpse into the
economic future thanks to a talk by HSBC
Australia’s Chief Economist, Paul Bloxham,
at the API National Conference in November.
VANESSA MITCHELL reports.
016 ANZPJ MARCH 20182018 OUTLOOK
I THINK WE HAVE GOOD REASONS
TO BE OPTIMISTIC. WE HAVE HAD 26
YEARS OF CONTINUOUS GDP GROWTH
H
SBC Australia’s Chief done better than western economies “Tourism is also growing.
Economist, Paul in recent times. While our economy We had 1.4 million visitors from
Bloxham, is optimistic has grown 25 per cent, the Chinese China over the last year, with
about Australia’s economy is 100 per cent larger—it considerable room for growth left,
economy heading has doubled in size since the early as only five per cent of the Chinese
into 2018, and there’s good news for part of 2008. This has fundamentally population has a passport.”
those dreading a housing bubble underpinned our economy,” Paul said. Paul also explained that while
burst in Sydney and Melbourne. Paul went on to explain that Australia’s economy has been going
Paul, who was previously an following the mining boom, good well, it’s understandable why many
analyst for the RBA, said Australia is economic decisions meant that we don’t hold that opinion, as it’s all
on solid ground. navigated our way through the mining down to where you live.
“I’m going to start from a position downturn without a large crash. “Overall, the world is different
of optimism. A lot of people are quite “On average, mining contributes post GFC. Things have changed,
pessimistic at the moment because about 1.5 per cent to our economy. households are now more cautious.
you can make a name for yourself if However, by 2012 mining was Also, it all depends on where you
you pick a downturn, and if you pick a contributing nine per cent to our live. If you lived in WA or QLD, then
downturn every year, you’re bound to economy. Interest rates were lifted, 2008-12 and the mining boom was
be right eventually,” Paul said. which pushed up the Australian dollar. wonderful time for you, followed by
“But I think we have good reasons This in turn saw housing construction a bad time since. But in NSW and
to be optimistic. We have had 26 and tourism slow in response. VIC the reverse is true.
years of continuous GDP growth in “However, following the mining “Now, Sydney and Melbourne are
Australia, and over recent years we boom, the falling commodity prices enjoying the benefits international
have done very well when compared meant cash rates could be cut to students and tourism bring.
to rest of the world. Our economy is balance this out. As such, despite lower “But resources are starting to
25 per cent larger than it was at the commodity prices, the lower rates improve again. There is not going to
beginning of 2008. In comparison, and a lower dollar has driven a house be another mining boom like 2012,
the US economy has grown 15 per price boom in Sydney and Melbourne, that was a once-off, but prices are
cent, and the European economies leading to a housing construction steadying. Also, the global economy is
have grown by only six per cent in boom. There has also been a very starting to improve—there has been a
the same time. strong pickup for services exports in solid pickup in the US and Europe.
“We didn’t have a GFC here, we tourism and education. International “The big factor in Australia is
kept growing, and the reason we have student numbers, mainly from China, mining investment is starting to
done so well is because Australia’s are picking up to new record levels, stabilise at about three per cent of
economy is highly tied to Asian leading to education being our third the economy.
economies, and Asian economies have largest export. “All this will mean growth will
0172018 OUTLOOK
lift to over three per cent this year “The fact is, we didn’t build enough fact urban density is very low here.
in Australia. Globally, we are seeing dwellings in the early 2000s, and this We also do no have enough good
interest rates are starting to lift, which was due to the need to hold back the quality urban infrastructure.
means interest rates might start to economy during the mining boom. “Yes, household debt quite high.
shift upwards here as well. Now we’ve been catching up and Why? Because house prices are high.
“The labour market is also picking working down the undersupply. But the real question is who holds the
up quite strongly; in fact, we’ve seen Even with all the recent construction, debt? Are they able to service it? In
the strongest growth in labour over we are not in a position where there is Australia, 75 per cent of debt is held
past year since 2008. This means oversupply in the national market and by top 40 per cent of income earners.
upward pressures on wages are likely,” we are certainly not like the US, which There are some low income earners
he said. had an oversupply issue. in the mix, but not a lot. Australia’s
“In QLD the story is different. been tightening up lending standards
HOUSE PRICES
But what does all this meaning for
housing process in Australia? Paul says DWELLING PRICE TO INCOME RATIO IS
there is no bubble, and while some
prices may cool, there will be no crash.
MUCH HIGHER, BUT THIS DOES NOT MAKE
“As we all know, there has been US EXCEPTIONAL AROUND THE WORLD
a house price boom in Sydney and
Melbourne over the last few years. The large ramp up in building recently as well. On average, people are
Melbourne prices are up 55 per cent apartments is well ahead of population paying their mortgages on time and
over five years, and Sydney is up 78 growth. WA construction also they have about two years of mortgage
per cent. In contrast, Perth prices fell picked up, but population growth payments as a buffer. If interest rates
slightly, Adelaide is up 13 per cent, and slowed significantly following the rise some people will be squeezed, but
Brisbane is up 22 per cent. For markets mining downturn. it’s not going to be a national story.”
like that in WA and QLD, the end of “So, where are we headed? VIC has Paul goes on to conclude
the mining boom lowered income, still got momentum in the market, the the biggest risk for us is the
which brought about a softening of Sydney market is cooling, and we’ll see Chinese economy.
housing prices. a stabilisation of population numbers in “Watch China’s economy.
“So are Sydney and Melbourne in QLD and WA,” he said. The reason they’ve doubled their
a housing bubble? A bubble is defined “We’ll see only single digit rates economy over the past decade is
as house price increases well ahead of price growth now. There will be because they moved from exports to
of what can be explained by market no fall, except possibly in the Brisbane building infrastructure, and they’ve had
fundamentals. As such, I don’t think apartment market, and maybe the to take on more debt to do this. China’s
there’s a bubble. I do think prices Melbourne apartment market. Sydney debt is 280 per cent of GDP. However,
will cool reflecting the fact that we’ve will show a gradual rise in prices, it looks like China has got it under
brought more supply to market and maybe three to six per cent over the control; they are not beholden to the
the global interest rates environment next year.” rest of the world in terms of their debt,
is changing. Paul said those who point out the as they haven’t borrowed offshore.
“We had a lot of years of high income to dwelling price ratio are “FIRB and restrictions on Chinese
undersupply in both Sydney and also on the wrong track. investment have had an impact on the
Melbourne, and that has driven prices “Dwelling price to income ratio property market here, particularly the
up. We are just now building enough to is much higher than it used to be, apartment market—FIRB applications
meet supply, and even then we haven’t certainly, but this does not make us halved in the last financial year.
quite got enough supply yet to meet exceptional in terms of other countries Chinese restrictions on foreign
demand in NSW. Melbourne is still around the world. Our prices are high capital outflow, extra stamp duty,
rising in double digits for house price because demand is strong and supply and constrained access to onshore
growth, and this is because population has been low. We also don’t have a lot funding will continue to constrain the
growth is still strong relative to supply. of apartment buildings in our cities; in apartment market,” he said.
018 ANZPJ MARCH 2018CITIES OF THE FUTURE
CITIES OF THE FUTURE
Chris Johnson, CEO of Urban Taskforce Australia, discussed
the Cities of the Future at the recent API National Conference.
VANESSA MITCHELL reports.
019CITIES OF THE FUTURE
SYDNEY NEEDS TO DOUBLE ITS AMOUNT
OF HOMES FROM THE CURRENT 1.66
MILLION OVER THE NEXT 40 YEARS
T
he cities of the locate growth around city centres, of tall buildings across the world.
future are going to corridors and public transport nodes “Seventy-five stories is the
be more urbanised, for a new way of living. We will see tallest building in Sydney currently,
with higher density high-rise developments around due to aircraft restrictions, but this
living—particularly railway stations and a spreading is changing.
around public transport hubs. out to areas within walking distance “In New York we are seeing a
These sometimes contentious of railway stations. trend towards tall, thin, elegant
issues were discussed by Chris “This is already happening; we are buildings, such as 111 West 57th Street
Johnson, Chief Executive Officer of seeing towers popping up in various (see image on previous page), which
Urban Taskforce Australia, on the final areas that include a mix of residential features one apartment per floor and
day of the API National Conference. and commercial offerings. What stands at over 1,400 feet. The top
Chris, who is a former NSW needs to happen in the future is a apartment of this development sold
Government Architect and former strong integration between transport for US$90 million recently.
Executive Director at the NSW networks and the planning system, “Australia 108, featuring 100
Department of Planning, said we will and dialogue between these two areas. storeys, is under construction, and
be living a different way in the future. “Infrastructure is also key. We’ve will add to the skyline in Melbourne
“There is already a trend, suggested a long term metro circle line and feature shared living spaces
particularly in Sydney, towards people around Sydney that runs out to the between apartment and hotel dwellers.
living in a different way. There has Hills district, Chatswood, Bankstown, “The new metro rail line in
been a big swing in Sydney towards and the new airport, to connect the Sydney is generating new buildings,
apartment living; 70 per cent of new whole city. Sydney really needs to such as Wynyard Place, designed by
building approvals are for apartments. be thinking about light rail loops London architects MAKE. There is a
This is necessary, because we are not connecting to the main rail system to rejuvenation of tall buildings in Sydney
going to solve our population growth try to minimise car usage. In this way, now occurring that include mixes of
increase issues without accepting we could get 100,000 new dwellings residential and commercial. This will
apartment towers,” he said. around these metro lines. be the big trend moving forward as
“Sydney needs to double its “It is also important to realise that the city grows. Star Casino is currently
amount of homes from the current height is the way our cities will need building a new 70 storey building,
1.66 million over the next 40 years. to grow into the future, much like the while the Casino at Barangaroo
But, Sydney as a city is hemmed in height trend happening across the will feature a building of about 70
by the sea on the east, and National world. Currently, the Gold Coast’s Q1 storeys (see image next page). These
Parks and mountains on the west, so building is Australia’s tallest building two new towers will offer a spectacular
it is reaching the maximum density at 78 floors, but when Melbourne’s entrance to Sydney.”
horizontally it can reach. Solutions Australia 108 is built it will stand at Of course, the high-rise
to this include doubling the density 100 storeys (see image next page). developments are not without
across the entire existing Sydney “We are a little behind, however, their objections.
footprint and therefore changing the when you consider the tower being “There is drama as Sydney
very nature of the suburban detached built in Jeddah, which will be one changes. About a third of our homes
way of living. kilometre tall when finished. This kind are currently apartments, but this
“The more likely solution is to of thinking is challenging the future will grow to about 50 per cent over
020 ANZPJ MARCH 2018CITIES OF THE FUTURE
the next 20 years. This threatens the dynamic future Sydney. However, the worry that a large percentage of big
character of suburban living in Sydney, move to more urban and apartment houses have only got one or two people
so there is a lot of reaction against living is a critical part of our cities in living in them. We need to encourage
growth. But demographics show that the future. There will be a swing to a people to live in other ways.
those people who live in apartments living style that is more cooperative “This is a complex dialogue, and
tend to be younger people who are and sharing, and the Federal the easy answer is to say ‘we’re full’,
not necessarily interested in owning Government should be pouring money but that’s not a solution to keeping
houses, three cars, etc., what they want into metro railways in the cities, and our position as a modern, dynamic
is a convenient lifestyle with access State governments should be ensuring city. When you get to a population of
amenities like shops, pools, and gyms. that’s where density is occurring. eight million, which is where Sydney is
It will be an urban living model as we “To change people’s thinking you heading, then you need a more urban
move forward as a city,” Chris said. need something bold, you do need to layout. Sydney is building 725,000
“Of course it is a challenge to get leap forward sometimes by putting out homes over the next 20 years, so we
people to look forward, and to accept stronger ideas. Detached houses are all need to look at a different way of
living in a more resort-like, more of course ideal for families, but it is a living,” he said.
Australia 108, Melbourne. Star Casino Tower in Sydney.
021HOUSING AFFORDABILITY
HOUSING
AFFORDABILITY:
WHERE TO IN 2018?
Housing affordability is a hot topic, particularly
in Sydney and Melbourne. PAUL MCKENZIE AAPI
examines what, if anything, can be done to hold
on to the great Australian dream.
H
ousing affordability is a challenge, especially within Sydney for new affordable housing suburbs.
and Melbourne, and particularly for first home buyers. Together with stamp duty exemptions/
According to CoreLogic, dwelling values increased by concessions for first home buyers, with
3.1 per cent in 2017 in Sydney, and this is on the back of strong available first home buyer grants, this
growth in both 2015 and 2016. In Melbourne, dwellings increased will assist first home buyers over the
by 8.9 per cent, again this follows strong growth in the previous two years. coming year, as will a decrease in
As such, housing affordability has become a hot button topic in both the foreign ownership competition thanks
political and development arenas. Those looking for a home, particularly first to the foreign non-resident stamp duty
home buyers, are rightfully asking if any relief is in sight. and land tax surcharges. Tighter lending
There are some signs the tables may finally be turning in 2018. 2017 saw extra to investors and interest-only purchasers
taxes and duties placed on foreign investors, and there was tightening of lending are also expected to have a continuing
restrictions for investors, both of which influenced a slight downturn in dwelling effect on dwelling prices over the
price growth Australia’s most populated cities, Sydney and Melbourne, at the end next year.
of 2017 (0.9% and 0.2% respectively in December 2017, CoreLogic). For first home buyers in Sydney
But to expect Australia’s two most populated cities to significantly decrease and Melbourne in particular, these
in price is not realistic. Sydney and Melbourne both have large populations and policies are giving hope to many who
attract a large amount of migration annually. hope to purchase their first home in
However, both NSW and VIC have implemented housing strategies/planning 2018 and beyond.
022 ANZPJ MARCH 2018HOUSING AFFORDABILITY
THOSE LOOKING FOR A
HOME, PARTICULARLY
FIRST HOME BUYERS, ARE
RIGHTFULLY ASKING IF
ANY RELIEF IS IN SIGHT
WHY IS AFFORDABILITY AN ISSUE? seeing retirees investing in property, a delay is environmental, for example
Australians are hardwired for home and this, coupled with local and other along waterfront areas approvals
ownership, otherwise known as the overseas investors buying residential are taking longer and developers
‘great Australian dream’. So, what has property, means competition with first told to reduce such densities due
been driving up the housing prices home buyers, especially at auctions. to environmental considerations.
recent years in Sydney and Melbourne? Finally, planning and housing Sometimes it’s political. For
Quite simply, record numbers of approvals have not been keeping up example, many councils are
migrants are moving to these cities, with population growth. Some housing controlling housing approvals in line
and this combined with Chinese projects, especially those targeted at with their current infrastructure and
investors hungry for Australian housing affordability, are experiencing future infrastructure limitations in
property, which is seen as a safe haven approval obstacles, causing delays. order not to flood the local area with
for investment, has meant supply is The reasons for housing approvals too much housing that pushes their
not meeting demand. being delayed are many and varied. infrastructure limitations.
Australia also has an aging All developers want high densities State government policy is also
population, with more senior for greater profits, but this is not involved. Government policy earmarks
retirees living longer, independently, always what’s best for an area some areas with higher densities
and choosing not to downsize. for environmental, lifestyle, and and easier approvals, whilst some
Self-managed super funds are also infrastructure reasons. Sometimes areas are marked as lower densities
023HOUSING AFFORDABILITY
STATE OF THE MARKET
reported earlier in 2017. Despite this,
Change in Dwelling Values Sydney’s dwelling values are still 70.8
per cent higher than in February 2012.
City Month Quarter Annual Total Return Median Value Melbourne dwelling values
dropped 0.2 per cent in December, the
Sydney -0.9% -2.1% 3.1% 6.3% $895,342 first monthly fall since February 2016.
Nationally, dwelling values were
Melbourne -0.2% 0.9% 8.9% 12.1% $720,417 4.2 per cent higher in 2017, which is
considerably slower pace of growth
Brisbane 0.0% 0.3% 2.4% 6.5% $491,391 compared to 2016 (5.8%) and 2015,
where values rose 9.2 per cent
Adelaide 0.2% 0.3% 3.0% 7.4% $432,772 (CoreLogic, 2017).
Sydney continues to have the
Perth -0.1% 0.1% -2.3% 1.6% $463,886 highest median value of $895,342,
followed by Melbourne $720,417.
Hobart 1.5% 3.1% 12.3% 17.8% $403,800 CoreLogic’s result show transaction
volumes continue to trend lower, due
Darwin -0.9% -2.9% -6.5% -1.3% $424,901 to fewer settled sales in the largest
capital cities.
Canberra 0.2% 1.0% 4.9% 9.6% $591,011 Tim Lawless, CoreLogic’s head
of research, says year on year
Combined Capitals -0.4% -0.5% 4.3% 7.8% $656,161 transactional activity is already
13.2 per cent lower than the most
Combined Regionals 0.2% 0.5% 3.8% 9.2% $355,994 recent peak of the 12 months ending
August 2015.
National -0.3% -0.3% 4.2% 8.1% $548,817 It is estimated there were 471,017
settled sales of dwellings nationally
Figure 1: CoreLogic, Residential Report, December 2017. over the 12 months to December 2017,
with 296,916 settled sales across the
combined capital cities, and 175,001
and therefore have a longer/harder December 2017 showed national settled sales across regional markets.
approval process. residential values fell 0.3 per cent in Nationally, the number of settled sales
At times, delays are a combination December 2017. This is the largest was 4.8 per cent lower over the year,
of all three. For example, a new railway monthly fall since February 2016 and with combined capital city sales 6.4
line, such as the Sydney northwest sets the scene for softening residential per cent lower, and combined regional
and southwest railway lines, opens market conditions in 2018. This market sales down 2.2 per cent.
up opportunities for developers, with follows a 0.3 per cent down in the Transaction volumes have fallen over
planned stations, infrastructure, and overall December quarter of 2017. the past year in Sydney, Melbourne,
government policy implementing new According to CoreLogic 1, on an Brisbane, Adelaide, and Canberra,
housing densities, making approvals annual basis, all capital cities, with but are higher across the remaining
easier. However, in long established the exception of Perth and Darwin, capital cities.
affluent areas, housing approvals had annual growths in 2017 (see Other findings from the CoreLogic
take longer due to environmental Figure 1). However, Sydney has been December 2017 report include
considerations, local politics in decline for the December quarter of the significant impact of broader
resisting change, pressure on local 2017, whilst Melbourne also started to economic data on housing market
infrastructure, and many locals with decline in December. conditions, such as population growth,
long-established houses living on large Sydney dwelling values were the number/level of construction
blocks do not want to live next door to down 0.9 per cent over the month of approvals, upgraders and investors,
a block of apartments. December, and 2.1 per cent lower over mortgage rates, labour markets, and
the December quarter. The annual immigration numbers/levels. Rental
THE STATE OF THE MARKET growth rate of 3.1 per cent is far lower growth has increased over the past
CoreLogic’s residential report from than the 17.1 per cent growth rate year to 3.5 per cent nationally for
024 ANZPJ MARCH 2018HOUSING AFFORDABILITY
houses, and 4.1 per cent for units, compared to Sydney. across these cities,” he says.
but has begun to slow over recent Australian Bureau of Statistics
months. The number of properties Demography Director, Beidar SCHEMES TO IMPROVE HOUSING
advertised for sale is lower than Cho, says Australia’s net overseas AFFORDABILITY
a year ago nationally, but higher migration for the year ending 30 So is there hope for first home buyers?
across the capital cities. Days on the June 2017 was 245,400, an increase Both the NSW and VIC State
market have risen from its recent of 27 per cent from the previous 12 governments last year implemented
lows, and auction clearance rates are months (2015-16). policies to improve housing
substantially lower than levels earlier “Net overseas migration in NSW affordability, such as:
last year.
WILL THE ’BUBBLE’ BURST?
Quite simply no, as both Sydney OVERSEAS MIGRATION INTO VIC AND NSW
and Melbourne keep attracting REACHED RECORD HIGHS IN 2017
record numbers of migrants from
overseas, attracted to work, business,
education and lifestyle opportunities. and VIC increased by 31 per cent and
All the trends say Australia’s 23 per cent respectively (for the year 1. Housing strategies and planning for
population within Sydney and ending June 30, 2017). This growth new affordable housing suburbs. In
Melbourne will keep growing, has seen both States surpass their NSW this includes the Blacktown
as migrant population trends previous recorded high in 2008-09,” area, with suburbs such as Marsden
keep growing. Mr. Cho says. Park. In VIC, this includes the
Although the residential The mining State capital cities of Dandenong area, with suburbs such
markets in Sydney and Melbourne Perth and Brisbane have cooled off as Narre Warren;
are starting to soften, Sydney and from the effects of the post mining 2. Stamp duty exemptions/concessions
Melbourne continue to attract boom. Canberra, Adelaide and for first home buyers; and
migrants from around the world. Hobart are growing as secondary to 3. An increase in foreign non-resident
According to CoreLogic, overseas Sydney and Melbourne. stamp duty and land taxes.
migration into VIC and NSW However, CoreLogic reports the
reached record highs in 2017. This weaker housing market conditions In NSW, the Premier, Gladys
is because Sydney and Melbourne are likely to continue into 2018. Berejiklian, is looking to develop
offer great cosmopolitan lifestyles, “From a macro perspective, late ‘priority precincts’ for housing
with employment, business, 2016 marked a peak in the pace of affordability, from areas of new
investment, financial and education capital gains across Australia,” and proposed train stations for the
opportunities up there with the Mr. Lawless says. Sydney Metropolitan area. This
world’s best. “In 2018, the housing market includes Sydney’s northwest and
Melbourne has a population of performance is likely to be southwest corridors, the sites of a
over 4.8 million, and population. significantly different relative to planned future rail network to link
net.au estimates the Melbourne previous years. We’re likely to see these two areas with the second
population will reach five million by lower to negative growth rates airport at Badgerys Creek 3.
the end of June of 2018. Sydney has across previously strong markets, Also, to make first home buyers more
a slightly larger population at 5.37 more cautious buyers, and ongoing attractive and affordable in the home
million, and it is expected the Sydney regulator vigilance of credit ownership buying market, the NSW
population will reach 5.64 million by standards and investor activity. Government made the following first
June of 2018. “National dwelling prices will fall home buyer stamp duty benefits from
Melbourne is growing at a further in 2018, driven lower by falls July 1 2017 4:
rate of 2,000 persons per week, across Sydney, and to a lesser extent,
whilst Sydney is growing at 1,000 Melbourne. After values surged 75 • N o stamp duty on all homes
persons per week 2 . This new trend per cent higher over Sydney’s growth (existing and off the plan) up to
seems to be driven by people from cycle and 59 per cent higher over $650,000;
overseas migrating to Australia and Melbourne’s, it’s rational to expect • Stamp duty partial concessions
finding Melbourne more affordable some slippage in dwelling values for all homes (existing and off
025You can also read
