Dr Shane Geha
Parramatta has been trying to be Sydney's second CBD for decades. Today it genuinely claims to be that, and it's done that by having a massive program by re-urbanising its city centre.
In my experience, I would say that these are actually the slowest approval times for both rezonings and development applications that I have seen in two decades.
The initiative does not cost the Government anything, as they are not outlaying cash... it's simply a guarantee. Provided the risk is reasonable or better and the younger borrowers have reasonable employment prospects or better, it can work very well, in terms of getting more young people into the market.
Australia's attitude and actions towards COVID-19 has been on the whole hyperbolic. It really is time for us to lift our head out of the sand, recognise the value of skilled migrants and look to move forward with a vibrant, inclusive and prosperous economy and country.
If you are considering buying a new house with land, or just a plot of land by itself, remember that land goes up in value over time whilst dwellings lose value through depreciation. So, the bigger and more expansive the land you purchase, the better the long-term prospects for capital growth, should you decide to sell in the future.
Given the bulk of Australia's population lives in just six major cities, those centres will continue to have solid price growth - at least in the short term. Even with locked borders, ex-pats are comping back with millions of dollars and either thinking 'Let me settle in Australia, or invest in Australia.'
There's now more regulation and more bureaucracy to help with the bottlenecks but unfortunately we can see the approval times going in the opposite direction to the desired faster timeframes.
Regional migration will be short-lived. There needs to be further investment in regional areas if they are to become genuine hubs of activity and business - a place people choose to live long-term.
Working from home is short-lived joy. Having the whole family together with your work, study and schooling is unsustainable. There will be a flood back to the office. People will want to go back for the think tank effect.
Land developers can take land that is not appropriately zoned and rezone it for a multiplicity of market-based uses, including shops; homes; commercial and industrial facilities.
Inadvertently or purposefully, it appears that nearly all of Australia's local governments seem to have a real issue with density, with developers having to navigate a myriad of height and asset class conditions, depending on where or what they wish to build. This not only makes for a far more arduous process, it also makes some areas simply uneconomical to build in.
Young investors may want to consider this type of investment because it allows them to benefit from yields and capital growth in the property growth, with a much smaller entry-level point for the investment.
We have a system that needs to very much be seen as being equitable, fair, transparent and all of those things as much as it is doing those things. It tends to be more concerned with the outward appearance of process than with the results it delivers.
Real estate prices have outstripped wage growth by a very long way in the last decade. If you look at housing, I'm 52 but when I was a child of 13 or 15, it was three times the average wage earning and today it's close to 12 or 13 times.
In the end, all the services that are filled by migrants, that man the lower end of the economy, in tourism, agriculture, restaurants, and hotels, they will all go, they will all disappear.
Exchange-traded funds and REITs, as well as listed and unlisted property trusts, are all ways that an investor may be exposed to the property market, without being a direct property owner themselves.
Yields on industrial assets, usually between 6 and 12 per cent, are now likely to be 3 per cent. While that may be an unattractive investment in a normal atmosphere, in the current environment of ultra-low interest rates, demand is still strong.
Promises of a revamped, reinvigorated system have been just that, promises. But for those of use who are currently toiling away with the labyrinthine New South Wales Planning System, we cannot see or feel in a single Development Application that the process is improving. And this has dire consequences for house prices.
Build-to-rent in the Sydney CBD will only succeed if the land is free, the taxes are removed or rental returns increase to say 6 per cent of total development costs. None of these factors appear likely.
It will be the growth of the two big cities that will give permanency to regional growth and allow the regions to thrive as genuine hubs of business and activity. This could then entice many more people to make that move - I see the value of investing more heavily within these regions, only at that point.
You can't build on unzoned land without a development application and a myriad of other approvals, both at a council and state level. As such, as have a highly inelastic product that immensely slows down supply, which, if done long enough, increases the value of the stock dramatically, particularly if there is a high demand.
The problem with the planning system in NSW is we spend over 80 per cent of our time in adversarial combat with authorities over a plethora of rules. The system today is obsessed with minimising negative externalities. That is not design and rarely does it achieve excellence.
Doctors, builders and transport and logistics professionals are likely to see better-than-average pay increases as skilled migrants are kept away until at least October 2021.
Pubs often sit on very attractive and sizeable portions of land, which through their locational attributes, lend themselves to gentrification. Here, the land price simply becomes so attractive that the land is rezoned to new uses for coming generations.
We can't be lulled into creating incentives for growing the regions when it is more important to get the infrastructure settings right for our cities. This is where most people want to be and there's a reason for that - it is where the work is.
Zoning is a very important consideration. It could mean the difference between an easy upgrade or a difficult and costly update. It affects the buyer's ability to add storeys to the building, extending or even make significant structural or renovation changes.
Most people are primarily drawn to employment opportunities which are far greater in Sydney than they are in Wagga Wagga, and they also want the other attributes cities can offer like good schools for their kids.
So how much will really change in the post pandemic world for property in 2021 and into 2022? With a vaccine, virtually nothing. Without, probably a little bit.
It is definitely true that by fast-tracking many of NSW's state-significant infrastructure projects, this will greatly hasten out climb out of the current economic abyss we now find ourselves strewn at the bottom of.
There is not greater challenge than a world-wide pandemic to test the psyche of governments and billions of intelligent people world-wide. While we are yet to see just how effective these latest reform will be, at least we are now having renewed vigour and purpose.
We've got two systems designed for the early twentieth century, superimposed on each other in our system, trying to run in the twenty-first century.
When a building is built, there is a magnification of economic and job benefits - new jobs are created. Interior designers are brought in and service staff keep the building running in its final built . The flow on effect is enormous.
It is the people in our economy that generate wealth, so the more we lock them down, the more difficult this is going to be for us to recover economically in the long term.
The predicted drop in net migration would likely lead to reduced rental demand and lower rental prices as well as some reduction in demand for new properties.
If you want innovation to continue, and if you want investment to continue and if you want the economic health of the nation to continue then I think cutting migration at a period like this would be detrimental rather than helpful.
With the new infrastructure boom that will hopefully ensue following COVID-19, we will also need new migrant skills to assist our small but resourceful workforce in creating new economic growth, so vital in re-igniting our economy.
If you didn't want to raise taxation to maintain GDP growth, and revenues, and tax and the tax base, you basically have to have either more babies or import people in the 20 to 60 age group. That remains a very important part of keeping our economy running.
We should, of course, make all jobs available first to our locals who are unemployed - if they are unemployed. But we do also know that a lot of the jobs in hospitality, tourism and agriculture are almost exclusively filled by a migrant workforce.
Denser living is what allows capacity constraints in one hospital, to be alleviated by another nearby. It is also allows strong messages to be easily disseminated to large populations, in shorter time periods. It also makes emergency services far more efficient and timely in reaching ill patients requiring care and providing additional services like helicopters if required.
Two of the world's most densely populated cities, Hong Kong and Singapore, were those that managed to contain the spread of the virus successfully.
With places grounded and borders closed, not only are we choking the skilled migration necessary to boost the tax base to pay for the public services we so desperately need, we are also allowing misguided populism to win over economic rationalism and good sense.
As fears of a recession grow, Australia needs migrants more now than ever before to boost economic output and stem the damage to the hard-hit education, tourism and agriculture industries.
Those of us in the building and planning sector know too well how insufferable onerous red tape and overregulation can be. Additional reporting and administrative burdens such as those suggested by the Commissioner will likely add to costs and slow things further.
The pervasive pattern thus far has been to introduce more rules and regulations that are designed to help us do better and go faster. Except we do worse and go slower. And though we have been conditioned to heed the touted fears of an "unregulated" world, having a DA for a complying project take 24 months and a rezoning stretch to 5 years, cannot be in anyone's best interest.
Enforcing material regulations in areas where people choose to set up and make their homes may seem like a harsh or extreme measure to some, but using the wrong materials in a high-risk area can have disastrous effects when the worst happens .
We want the building industry to remain relatively innovative, free, nimble, but at the same time give the consumer a level of confidence which to date they don't have.
It's hardly surprising, because it's actually a very affordable, by comparison, place to live with the great convenience of a great new metro line... which is the most efficient in Sydney.
Every year we see more rules and regulations to helps us do better and go faster. Except we do worse and go slower. Those of us in the urban development industry, have long come to understand the intricate complexities of an antiquated system that is trying to deliver. But we have stopped complaining because what we thought was slow ten years ago, is now considered "lightning fast".
We've understood as a nation endless sprawl is not good for economics. It's a massive stretch of the economics of pipe and road. Density is very important in a city if you want public transprot to work.
Roads were generally not designed for bikes. But when pedestrians had to share the footpath with cyclists it became very unsafe for those on foot.
In this new age of technology, it is more important than ever for the next generation of engineering and property students to harness their speaking skills. People are at the heart of what we do as developers and effective communication is fundamental to building a successful career in urban sciences.
"Rather than plague an already complex and burdensome system with further bureaucracy, the government should establish a register of independent expert engineers, certified and endorsed by the Institute of Engineers Australia, to oversee all designs approved for construction. This would be inexpensive to implement and would also help restore public confidence."
"It's already hard enough for the everyday Aussie to get by. The cost of living across the country is rising and congestion charges will simply add to the living costs of people residing in our major cities - and there are approximately 67 percent of us choosing to live in six places."
"After the mandatory stay conditions expire, the majority of workers on these visas will uproot and head to the city."
"We need strong population growth and significantly higher density living, to stimulate a plateauing economy, which is facing significant challenges as the Reserve Bank grapples with low growth and weak consumer spending, thereby plunging interest rates closer to zero."
"Density allows public transport options to be optimised, thereby reducing the need for motor vehicle journeys."
"I would argue that the congestion is not even genuinely caused by more people. It's genuinely caused by the planning system being so far behind the eight-ball, in terms of delivering high density near the newly constructed rail stations and bus nodes."
"We've had migration for the best part of 120 years so the reality is this: it's not the people who create the congestion, it's the way you get them to commute that creates the congestion."
"Planners needed to move beyond the tradition of grouping together similar land uses, as this increased the number of journeys each Australian needed to make to and from work."
"The industry is both legislated and self-regulating - a hybrid system that thus far has been fit for purpose."
"Mixed-use building are the most conducive method of creating a more sustainable urban model; however, mixed-use planning is not prevalent today."
"Until we have depth of population, sort of closer to a 50 or a 60 million, the regions will not work very well."
"The reverse is, have no immigration tomorrow, say. We will have stagnation in growth. We will have a shrinking of the tax receipts for the next 3 or 4 years. W will not be able to fund existing services. We'll either have to borrow or tax more - both of which are unpalatable, electorally."
"It is very easy to say 'let's shift the blame somewhere else' but at the end of the day, this is kind of every one's problem."
"The idea of consulting endlessly for long periods of time is not productive."
"The theory of filling the regions with migrants might be correct and makes some sense, but in practice we should be careful that we don't have a cure that is worse than the disease we are trying to remedy."
"If we simply send migrants to the regions without thought or planning, we will end up with ghetto towns rather than ghetto suburbs."
"It is understandable that people think that new growth should occur in the regions. However, this simply will not work in Australia as migrants will leave those regions as soon as the curfew period is up."
"Our future depends on migration. Strong population growth and significantly higher density living is the solution to our problems and any contrary suggestions is just nonsense."
"It is a long-held tenet of land economics that access to transport always produces an increase in land value."
"To not rezone, renew and change is not to stand still - it's to fall behind."
"For a country and continent spanning 7.692 million square kilometres, the misleading and relentless narrative that Australia is already too full is quite frankly, unfounded."
"In all of the successful cities in the world which we love - Paris, London, Rome - have densities four or five times those of Sydney"
"What will happen to Sydney when key workers and the like are forced to live some 30 kilometres from the centre?"
"Density accommodates population growth and encourages migration, key to driving infrastructure improvement and boosting the economy."
"To buy or not to buy: that is the question."
"The city-makers of old recognised that effective city-making is built on the ability of the land to support efficient transport links and facilities. In Sydney today, however, we appear to have lost the ability to marry transport and city-making."
"Melbourne has done pretty well on the inner-city, small apartment front - something that has helped it cope with a lucrative foreign student boom. But that transient population is not the main game."
"Our eight biggest cities now account for over 77% of Australia’s total population of almost 25 million, indicating that we do still love being in the big cities."
"Housing is a basic need rather than an item of choice, so should we be worried that the average person can only afford to live on the outskirts of the city?"
"They say that charity starts at home and there is probably no time when this has been truer than in Sydney today – charity starts with the family home and how to afford one."
"We are looking at a difficult situation for housing affordability because we are looking at something like 12 times the average annual salary as opposed to three times two decades ago."
"Rezonings in Dallas take four to eight months with most development applications completed in under one month. That is like greased lightning compared to the Australian planning process."
"Density is wonderful, tall can be fantastic, we should not be afraid of it."
"We have never planned. We’ve just reacted to things after the event, with the best intentions. That’s what we do. We call it planning but it’s not planning, it’s retro-fitting."
© Copyright 2018 Dr Shane Geha