Residential development – is anything sacred

Culloden – residential development – is anything sacred? Photo by Laurel Wilson

To begin this two-part series on residential development and how it became not only unaffordable but also distressingly generic, we ask the universal question – is anything sacred? The example here looks at an unpopular proposal to build luxury houses on the doorstep of Scotland’s famous battlefield, Culloden. Regular readers would be familiar with this image on my website, cheekily captioned ‘Bob’s writer’s cottage’. In truth it is a stone crofter’s cottage within Culloden Battlefield, a spooky windswept moor near Inverness.

The proposal to build 16 luxury homes half a mile from Culloden Battlefield, a war grave, was given planning permission by Highland Council in May this year (12-8 vote). The BBC reported that the National Trust for Scotland, which manages the battlefield and opposed the housing project, said the case “Illustrated why Scotland’s planning system has to be reformed”.

Culloden Battlefield is where Jacobite and government forces clashed in April 1746. The housing development is within the battlefield’s conservation area and campaigners have argued that the fighting took place in a much wider area.

A protest movement continues to agitate, with a petition on attracting more than 100,000 signatures.

Much nearer to home, the story is depressingly familiar. The green hills of former dairy farms near Maleny Township have largely been given over to sprawling housing estates. It’s even worse on the Sunshine Coast, where houses on new estates are packed tightly together, not a tree in sight and often with only one road in and out. Pro-development people, and I know a few, would tell you that this is the free market at work – supply and demand. Affordable maybe, and eagerly sought-after yes, but not on my housing short-list.

Houses are ‘unaffordable’ – blame the baby-boomers?

We read a lot about how (we) baby boomers created the unaffordable housing market, buying, renovating and selling during a period when house prices doubled and in some cases tripled. Guilty as charged, but we just took the opportunities as they arose, as most people do. And in my experience, most ‘boomers’ bought a modest starter house, not always in a capital city, gradually up-grading as time and savings allowed.

So, apart from profit-taking baby boomers, the factors most prominent in the ongoing cost of housing include the rising cost and scarcity of development land, steadily increasing council infrastructure charges (passed on to the buyer) and population growth. Property investors, drawn to the sector by negative gearing (writing off costs on tax), also contribute to the affordability crisis by steadily increasing rents.

Too much house these days?

The flip side to the ‘baby boomers got rich on real estate story’ is what happens to our generation now, when we are all knocking on 70+ and need to downsize to more manageable properties? Downsizing in the same market, we are finding, is a rat race, as other people in the same circumstances move first. It is hard to find a smaller property of equal standard to the one you now have, and, take a profit on the way through.

Many older people take the retirement village option, the strictly legal but egregious models where you don’t own the real estate and pay rent and other costs which inevitably rise as time passes. Another real downside is that the retirement village unit usually ends up as someone else’s problem: the adult children of elders who are either in care or have died. So, Four Corners exposé or not, this arm of development will continue apace. The main reason, as once voiced by Spike Milligan’s Goons’ character, Eccles: “Everybody’s gotta be somewhere”.

Mobility –sometimes a choice, sometimes a necessity

The tendency is for Australians to be always on the move, looking for greener grass in a drought-stricken country. The 2016 Census found that just under half of Australians moved house between 2011 and 2016, with one in six moving in the previous 12 months.

This is a healthy state of affairs for people who earn a living in the businesses of development, property investment, real estate sales, conveyancing, house removal, storage and retail furniture, whitegoods and hardware. But as any psychologist would tell you, moving house is up there on the stress register with divorce and death of a loved one.

Young people are the most mobile, with one third of Australians aged 20-29 and a quarter of those aged 30-39 moved house between 2015 and 2016.

An earlier Australian Bureau of Statistics survey found that people living in young households without children were very mobile: the vast majority (90%) moved at least once and 40% reported having moved three or more times in the previous five years.  Young households were most likely to be private renters (58%) or owners with a mortgage 39%). Statistics like these do not change much over the years – as one might expect, the age group 75-79 are the least likely to move. although there is an upward spike in the 80+ age group, reflecting no doubt a move into care of one kind or another.

Young people are often forced to move from rented accommodation because of a range of factors including obtaining employment elsewhere, rising rentals, owners selling the rental property or eviction.

Therein lies the beauty of owning your own home – you don’t usually have to move until you decide.  Of course, the housing market may not co-operate when you decide to sell. You may not get the price you want/need or the property might sit on the market for months, if not years.

We moved to the Sunshine Coast hinterland in 2002 and bought half an acre with a two-level brick home. When we think about downsizing to a more manageable property (say 1,000 sqm and a one-level brick house), we find there is little on the market that fits the bill. There are plenty of spacious properties a few kilometres out of town with acreage, sheds, dams and ride-on-mowers. Those people are trying to downsize too. The alternative is to sell the house and buy a unit, with the issues of body corporate fees and the smell of burnt toast from close neighbours.

As we drove around Australia in 2014 and on many forays since, this is a story repeated all over the country. Many retirees, finding they are running short of cash, sell up and move to a more affordable town. They risk becoming isolated and lonely, split from support networks. On the other hand, they are cashed up and can afford to improve the cheaper property they bought in Mungadillabiddy-on-Trent. As for support networks, there’s always Facebook, Skype and travelling to stay with friends you made in your last six or seven moves.

Next week: Can you afford to move back to the big smoke?

Postscript: If you have not heard my song about Nauru, here is the YouTube link. Please share with your friends if you agree with the sentiments.



Housing affordability and the empty homes scandal

Housing affordability in world capitals. Photo of Melbourne’s Southbank by Ashley Rambukwella flickr CC

The inspiration to start writing (again) about housing affordability came from left field. I was sitting back enjoying an American roots band, The Brothers Comatose, at the Blue Mountains Music Festival in Katoomba. Lead singer and front man Ben Morrison introduced the band, saying they were from San Francisco but maybe not for long. “The price of houses is crazy there (man) and most of the musicians I know are moving out because they can’t afford to live in the area.”

“Maybe we could move here,” he suggested, and the audience groaned, knowing that housing affordability is just as big a problem in Sydney and surrounds as in San Francisco, Vancouver, New York or Paris.

“Can we sleep on your couch?’’ he jested, before doing what musicians do to avoid thinking about the cost of living. Great band, by the way (check out this bluegrass old-style tune around one microphone).

Morrison’s complaint rang true – I did a modicum of housing affordability research which quickly showed that the median price of a house in San Francisco’s Bay area clipped $US1.5 million in the fourth quarter of 2017. The California Association of Realtors Housing Affordability Index shows that it would cost $US7, 580 a month to service the mortgage. The average monthly rent for a two-bedroom apartment is $US3, 441.

Housing affordability is a myth in Vancouver, Canada’s biggest West coast city. The 14th annual Demographia affordability study ranked Vancouver the least affordable among 50 American and Canadian cities. Internationally, it is ranked the third least affordable city among 293 locations around the world (Sydney was 2nd). The British Columbia Provincial Government has made several attempts to rein in the city’s galloping real estate prices, including a 15% tax on foreign nationals purchasing metropolitan real estate. Another new measure attempts to tackle a problem that plagues Sydney and Melbourne, Australia’s housing affordability problem cities.

The BC government conducted a survey which found that 8,481 houses in Vancouver were unoccupied during a six-month period. That’s 4.6% of the housing stock. Now the government is going to levy a tax on people who own houses and don’t occupy or rent them. The tax will be calculated at 1% of the assessed value. So the owner of a two-bedroom condo in Vancouver valued at $900,000 and deemed to be unoccupied will pay the BC government $9,000 a year.

Meanwhile, the housing boom in Vancouver is on the downturn, according to the Vancouver Courier, and they should know. Still, with a median house price around $3 million (Dec 2017) and condos going at $1 million apiece, it’s maybe time for that bubble to lose some air.

Meanwhile Down Under, house prices keep rising

Melbourne and Sydney made into Demographia’s top 10 list of the least affordable cities in the world. Sydney’s median house price of $1.11 million assured it of that invidious claim. Demographia ranks middle income affordability using a price-to-income ratio. Anything over 3 is rated unaffordable. On this basis, some of the world’s most affordable towns included Youngston, Ohio (1.9), Moncton, New Brunswick (2.1) and Limerick, Ireland (2.2). There are no affordable Australian cities on Demographia’s watch.

The least affordable city is Hong Kong (19.4) then a gap to Sydney (12.9) and Vancouver (12.6). Melbourne (9.9) is slightly more unaffordable than the aforementioned San Francisco (9.1).

Studies have shown that Melbourne is one of the big culprits in hiding empty houses among its residential property stock.

Australia’s 2016 Census showed that 11.2% of Australia’s housing stock was described as unoccupied on Census night. Empty property numbers were up 19% in Melbourne and 15% in Sydney compared with the 2011 Census. This growing anomaly is a global trend in the world’s biggest cities which have allowed rapid apartment developments.

Just why 1.089 million houses and units were unoccupied on Census night is hard to explain. But it probably suggests the owner/s were not in need of rental income and would rather keep the place in mothballs for use when the wealthy owners or friends and relatives visit (for the Australian Open, Melbourne Cup or the Grand Prix) or are relying on capital gain without the need to bother with tenants.

Hal Pawson of the University of NSW wrote in The Conversation that the spectre of unlit apartments in Melbourne’s night sky prompted the Victorian government to introduce an empty homes tax. Like Vancouver, this is levied at 1% of the property’s value. Similar taxes have been introduced in Paris and Ontario. Mr Pawson, Associate Director – City Futures – Urban Policy and Strategy, City Futures Research Centre, Housing Policy and Practice, UNSW, (try getting an acronym out of that. Ed.)  says the Melbourne tax only applies to inner city and middle suburbs and, there are ‘curious’ exemptions for foreign nationals with under-used second homes.

The flaw in the scheme is that it relies on self-reporting. Pawson says the lack of reliable data on empty homes is a major problem in Australia.

Census figures substantially overstate the true number of long-term vacant habitable properties because they include temporarily empty dwellings (including second homes).

Prosper Australia uses Victorian water records to estimate that about half of Melbourne’s census-recorded vacant properties are long-term “speculative vacancies”. That’s 82,000 homes. A similar “conversion factor” to Sydney’s census numbers would indicate around 68,000 speculative vacancies.

Labor Opposition shadow Treasurer Chris Bowen has proposed a national tax on homes left empty for six months or more.

Pawson says these “cruel and immoral revelations” come at a time when 400 people sleep rough in Sydney every night and hundreds of thousands more face overcrowded homes or unaffordable rents.

He says Australia has a bigger problem in terms of under-utilised occupied housing. Australian Bureau of Statistics survey data shows that, across Australia, more than a million homes (mainly owner-occupied) have three or more spare (read unused) bedrooms. A comparison of the latest statistics (for 2013-14) with those for 2007-2008 suggests this body of “grossly under-utilised” properties grew by more than 250,000 in the last six years.

While authorities are grappling with the issue and how to perhaps tighten foreign ownership laws, the ANZ Bank did its own survey. Foreign buyers were playing an increasing role in spurring demand for new houses and apartments, it found. The ANZ analysed Reserve Bank data to conclude that in 2015-2016, foreign investors bought between 30,000 and 60,000 dwellings in Australia. This equates to 15% to 25% of all new dwellings, 80% of which were apartments, which can be bought ‘off-the-plan’.

There is good reason to suspect that the new apartment markets in Hong Kong, Vancouver, London, Paris and other desirable world capitals are underwritten to some extent by foreign nationals (including Australians).

The problem which could arise, say in the case of a global recession, is what happens in cities like Melbourne and Brisbane where foreign investors have bought up to 35% of new stock, if these owners are forced to sell.

Not to worry, most big box discount stores will give you a large cardboard box in which to live. The dumpster bins behind shopping centres have perfectly good food that’s just been chucked out because it has passed the use-by date.

Trust me.

FOMM back pages

Travel safe this weekend, people

John Hewson and integrity in a post-truth world

Photo of John Hewson – Crawford School of Public Policy

Nobody can call out an errant politician better than former Liberal Opposition Leader John Hewson. In the 22 years since he resigned from politics, Hewson has become a respected academic, the darling of TV panel shows like Q&A, and a regular on the celebrity speakers’ circuit. Yesterday, Hewson was a keynote speaker at Griffith University’s two-day summit, Integrity20.

Who better to address the opening topic “Post-Truth, Trust and the Ethics of Deceit?” Hewson has been speaking out about fake news and the propensity of politicians to stray from the facts, long before Donald Trump made it a catch phrase. He is also an advocate for evidence-based public policy, often identifying where politicians have used models and commissioned reports to suit their version of the facts.

So to Hewson’s opening address yesterday, where he used the climate change debate to support his argument for ‘evidence-based public policy’.

“We had a very hard-line position as a response to the climate challenge back in the early 1990s. I was calling for a 20% cut in emissions by the year 2000 off a 1990 base. We are yet to know how we are getting the 5% reduction in emissions by 2020 off a 2000 base. And of course, we’re committed under the Paris Accord to cut emissions by 26% to 28% by 2030.

“What’s happened over that period is drift – the issues have been left to drift. Housing affordability’s been left to drift, the climate response has been left to drift and the final line of that drift is the mess we have in the energy sector. Electricity and gas prices are running away to the point where the average household is struggling to afford to pay its power bills.

“These are the outcomes of negligent government over a very long period of time.”

Hewson believes the situation can be turned around, but it will take some years to reverse the damage. He said what the country needed was an honest debate about leadership.

“And leadership is going to be about telling people honestly the way it is. To get good policy up we have to educate people to accept the magnitude of the problem.

“But we don’t have any debate now in this country – it’s all negative. One side puts its hand up and says let’s do X and the other side immediately says no.”

One in three voted for someone else

He said people had lost faith in the two-party system. In the last election, one in three people did not vote for one of the major parties. The protest vote was not just something that had happened only in Australia, he added, citing Brexit, the US, France and Germany as recent examples.

“It’s a longer term trend and it will get worse before it gets better.”

The path to restoring voter confidence, he said, was by focusing on the issues that affect people – the cost of living, health, housing, childcare and education.

But the main problem was that the ‘wrong people’ were in government.

“If you asked them why they went into politics, they’d say to make a difference and leave a better world for their grandchildren.

“And then they do the opposite.’

Hewson, who will be 71 next Sunday, had a distinguished career in politics. He was leader of the Australian Liberal Party and Leader of the Opposition between 1990 and 1994. Before and after politics he has worked as a senior economist for organisations, including the Australian Treasury, the Reserve Bank and the International Monetary Fund.

In this context, it seems uncharitable to recall that in 1991 he advocated an unpopular goods and services tax. He lost the 1993 election to Paul Keating over the “Fightback Package”, of which GST was a central element. Ironically, Paul Keating (who first advocated a GST in 1985), shamelessly exploited public opinion to thwart Hewson.

All that aside, Hewson at least clearly outlined what he was going to do in 1991-93 and stuck to it. He is known still as a straight shooter, a man who once said he lived in hope of ‘spin-free politics’.

Day one of the Integrity20 Summit was not just about politics and truth. ABC presenter James O’Loghlin chaired a panel discussion about solving the world’s problems through innovation.

Inventor and futurist Mark Pesce showed a short video of a robot working on a farm in Indonesia. He described it as just two wheels, an axle and a smartphone on the end of what looks like a selfie stick, collecting data and producing crop reports. These robots cost about $2,500 and can be shared around a farming community. He also demonstrated how 3D printers, aligned with a simple robot used in smart phone technology, can reproduce all the plastic parts to build another 3D printer. Eventually, robots will also be able to assemble the printers – and that’s just the edges of the innovations universe.

CSIRO scientist Stefan Hajkowicz said the impact of Artificial Intelligence on the future of work had been greatly over-stated. He thought there were many areas where robots and humans would work side by side – in hospitals for example. The robot would do the blood test and the nurse would soothe the patient’s concerns.

But it turns out robots are crap at irregular tasks we humans take for granted, A robot cannot tie your shoelaces, for example. And, as Hajkowicz added, they can’t fold towels. They tried to get a robot to fold a towel. It took 20 minutes and did the job badly.

Today I attended the final full-day session of Integrity20, hastily scribbling notes and pressing stop/start on my hand-held recorder. You may wonder how I met my deadline – marvel at my prowess.

M.Y Prowess (sub-editor): “Isn’t it time I had a byline?”

BW: Ghost writers should be read and not heard – and try using commas instead of dashes – please – some of my readers find it tiresome.”

Next week: Bryan Dawe on satire, media censorship and the global rise of populism.