Alright folks! Before we get into today’s chat, here’s the link to PIPA Annual Investor Sentiment Survey 2017: Fill in here.
Moving on, today we’re in for a special treat with a Government figure—who just so happens to be directly involved with the rules about what we build, planning the future story of housing in Sydney and all of NSW!
Yep that’s right. We’ve gone to the top! We have Chris O’Dell—the man from Research and Insights in NSW’s Department of Planning and Environment on the show. Chris manages a very brainy team who provide analysis to support our strategic, OFFICIAL decisions. He absolutely loves his data, is extremely personable and open to the bigger and better plans (which are in the grapevine as we speak) for Sydney and NSW. Solving real world problems, Chris and his team have big plans for Sydney to be a global, game-changing, urban city! Rest assured, there’s some “takeaways” for the future of the Australian Property Market!
So the main topics discussed are:
- Sydney as a future urban city and what this will like
- The current Sydney market compared to the rest of the states (and Territory)
- The ever popular housing affordability debate in Sydney
- The official data coming out at Government level
- What is the Government doing to improve housing affordability in Sydney?
- The number of people expected to live in Sydney within 20 years (!)
- Will the “Sydney boom” end?
- What is Sydney and NSW doing differently that helping with Housing Supply and Demand?
- The inevitability of housing types and your future lifestyle
- The impact of advanced technology on property and capital cities
- What is being discussed at a Government level that just might scare you?
- Creative ways to tackle housing affordability and population growth
- Does the data suggest that there is even a property bubble in Melbourne and Sydney?
And some of the resources mentioned in today’s episode are:
- PIPA Annual Investor Sentiment Survey 2017 – Fill in here
- DPE population and housing data – Find out more here
- Our video on RealEstate.com.au – The other “C” word in property – Watch here
This is an informative, important one guys! So much so that we put our own fingers to the keyboard so you wouldn’t miss out on anything!
Now, because Chris is based in Sydney, we’ve had to invest in the ol’ virtual call … and at certain times during this podcast, sadly, Chris is a teeny bit hard to hear. We’re very sorry about this—so we’ve transcribed the ENTIRE podcast for you to read if there are any parts you miss when listening. Check out the transcript here:
Time: 00:01:20 to 00:15:20
Bryce: Alright folks! You’re on The Property Couch where every week Ben and I bring you The Insider’s Guide to Property Finance and Property Money Management! Hello Ben.
Ben: G’day mate. How are you?
Bryce: Very good.
Ben: That’s good.
Bryce: AWE-Guest. Are you enjoying Awe-Guest?
Ben: I am enjoying Awe-Guest. I love the guests we’re having on in Awe-Guest.
Bryce: Mate. How terrific. I mean, how good was it to play around with those reality glasses last week? That was amazing!
Ben: Mate. That was terrific. Still talking about it, yep.
Bryce: If you haven’t checked that one out, it’s still around—it’s the one we did with Nigel Dalton, who is the Chief Inventor at REA. If you normally listen to us, Ben, I think you should watch us on that one because there was lots of cool stuff—
Ben: Yeah, yeah. The video’s pretty cool.
Bryce: Hey, we’ve got a new feature that we’ve announced a few weeks ago Ben, it’s a little widget on our website, where you can leave a voicemail message. Three things I’m encouraging people to leave a voicemail: anyone who wants to speak, to be cut into an episode, just to say, ‘Hey, look this is how we’ve benefited from implementing the principles’—we’re not fishing for a testimonial; we just want to know the changes that you’ve made where you would have gone down one path, but now you’ve gone down another path as a result of listening—that’d be great to share with the rest of the community. Number two: any questions you would like ask to answer on the podcast, Ben, leave them and we will prioritise all of those. And it’s really simple, Ben—if you’re listening to this now on your iPhone, on your Android, on your … any device you’ve got—
Ben: Google Play—
Bryce: Anything. You can just quickly go and leave a message and if you’re listening to it, it’ll take 90 seconds—so if you go out and do that, we’d love you too. And the third request is we’re looking for people who want to be interviewed on the podcast, Ben, who are successful Property Investors who have actually implemented the strategies we talk about … and we’d love to find out a little bit more. So, for people who are keen to share that, let us know. Now, we can get some of our clients on—and we will, Ben—but we don’t want it to sound just like the—
Bryce: You know, a flavourless exercise. We want to hear from people who are doing it themselves and want to share it with us. So, let us know. Of course, a couple of other things: REA videos are going really well—realestate.com.au, check those out on our social media—Now Ben is time to put your PIPA hat on because there is a really important survey coming up.
Ben: There is! Right now Bryce, we are doing our Annual Investor Sentiment Survey. So each year and we started this a few years ago, we reach out to all property investors, all budding property investors and we are going to get a snapshot on how the pulse is like out there in the field. What are they feeling? Confident or not so confident? This year, we’ve also got a couple of additional questions that we’ve added in to our regular questions and they are around the lending changes. Has that restricted you in terms of continuing to build your portfolio?
Bryce: Oh, that’s good intel.
Ben: And what would be the interest rates difference for you to stop or to change to Principal and Interest to Interest Only. So we’re going to get some great insight and obviously then, that would be available on the PIPA’s website. So this is our big survey. The one we do where we reach out. It’s probably the biggest property investment survey in Australia. So we’ve got all our PIPA Members to send it out to their databases. We’ll obviously be sending it out to our subscribers as well. But if you want to learn more, just go to the Facebook page and there will be information there. Or alternatively, just go to our website..
Bryce: But even easier, Ben. If someone’s listening to this on the train or just walking as we speak, click on the photo of you and me on The Property Couch. The show note underneath will appear.
Ben: Stop it!
Bryce: The show note that Ivise will put there. Stiggy will put it there mate.
Ben: This is modern technology! No way!
Bryce: It’s simple mate.
Ben: This can happen? Unbelievable!
Bryce: People don’t have to.. well, what’s that Facebook address again, what was that website address again. Just go to the show notes, click on the link and fill it out because it will take you next to no time Ben but it will make an enormous impact for you the listeners and for you the participator.
Ben: Absolutely. So get on board and we’ll get an idea on how the market’s travelling around Australia.
Bryce: Thank you with your PIPA hat Ben.
Ben: Thank you!
Bryce: So my Mindset Minute theme today—before we get on to our very special, special guest. Ben: two geese were preparing to start their journey South for their annual migration when a frog asked if they were willing to take him with them.
Ben: Oh, jump on the back!
Bryce: (laughs) The geese said, ‘Yes, but we’ve wondered how it could be done!’ The frog was very creative and so he produced a long, but strong stalk of grass, Ivise, he persuaded the two geese to hold each end while he clung to the middle with his mouth. The unusual threesome took off and were making good progress when some men below—observing the strange sight—loudly expressed their admiration for their creativity and wondered aloud who had been clever enough to design it! When the frog heard them, his vanity got the better of him, and he opened his mouth to shout, “It was I!”. He immediately fell to the earth and was dashed to pieces.
Ben: Hahahaha. So, what’s the moral of the story?
Bryce: What’s the moral of the story? If you keep your mouth shut, people will never know just how ignorant you are. If you open it, you will remove all doubt.
Bryce: So, we have two years and one mouth and we should use it in that proportion because wisdom will provide us with the answer as to when we should talk and when we should listen.
Ben: Oh! Very nice.
Ben: Where’d you get that one from?
Bryce: Mate, I just sort of pull these things out.
Ben: Oh do ya? Just not revealing your source for that one?
Bryce: Mate, ah, just, ah—
Ben: Quote? Know anyone?
Bryce: Well, mate, as you know, I’m passionate about changing mindset and I loved the power of a story, so I thought, you know …
Bryce: Okay, let’s get into today then Ben—we’ve got a very a special interview with Chris O’Dell—the man from Research and Insights in the Department of Planning and Environment … welcome to the show, Chris!
Chris: Thanks guys, thanks for having me on!
Ben: So we’ve got a Government Planner on, I mean, these are the people who set the rules about how we build and what we can do so, it’s pretty cool!
Bryce: I know, how exciting! And one for the NSW listeners too! Us being here in Melbourne, so we’ve got a nice little Sydney perspective. Chris O’Dell loves data and analysis so much so that he’s forged a career using data and analysis to solve real world problems! Chris manages a team that provides analysis to help support our strategic decisions. Prior to this role, Chris studied Science and spent 10 years as a consultant in the Engineering Industry! Chris that would suggest that you love the detail?
Chris: Mate, I do love the detail. I love getting right into it—lifting up my sleeves and just getting myself immersed in the data and seeing what if I can find some fun stories and some stuff that can dispel some myths out there about the topics I’m interested in … so, yeah, it’s a pretty fun job to be in at the moment. And it’s pretty relevant too.
Bryce: Well what are some of those myths that you get to dispel in your job?
Chris: The one that really gets me and it’s one I banter about a bit with people—the classic one I always hear about is how much of an impact the GFC had on housing supply, especially in Sydney. I mean, we all know the GFC had a massive impact globally, but in Sydney and NSW—and a little bit across the whole country—the GFC actually didn’t have that much of an impact on our housing supply. And if you look at the data, it actually tells you that our housing supply numbers are dropping four or five years before the GFC even hit. So it’s quite a convenient story to tell; but it’s actually no the truth. We were already plummeting well before the GFC hit—and I think the GFC just might of, you know ticked us off a bit further, but it certainly wasn’t the cause of the problem, in terms of housing supply.
Ben: So, Chris, obviously I got to meet you at a recent Housing Affordability Conference we both did some Keynotes at and I was quite impressed by the story you did about housing affordability and whether there is actually an “affordability” issue, or a “desirability” issue. So, I’m really keen to have that conversation about what it looks like. You brought up a great slide that talks about this little town called Nevertire and you said many people in NSW are affordable. I remember it distinctly: $45,000 for a house on 32sqm of dirt, which just so happens to be a fair way out from Sydney. How far is Nevertire from Sydney?
Chris: Oh, look I think it’s about a 100 kilometres West of Dubbo—so it’s definitely not what you’d call a metropolis or “the centre of activity in the state”. But, I guess, like you’re saying— this Housing Affordability issue that everyone’s having; it needs to be framed a little bit more. That the affordability is definitely linked to everyone wanting to live in the desirable places in the country. And the desirable places in this country happen to be our big cities. And if you go out of the city … you can actually find places that are quite cheap. I mean $45,000 for a 4 bedroom house isn’t a bad proposition for people …
Bryce: You could put it on your credit card!
Chris: You could put it on your credit card. Yeah you could.
Ben: Would Council be subject to approval?
Chris: Yeah, there’s a few town houses there—
Bryce: Hey Chris, if we go to Sydney 101—because we’ve got a lot of listeners who don’t live in the city or even the country—what is it that makes Sydney so desirable?
Chris: Well, I’m just sitting in my office now. And I have this gorgeous harbour view as we’re talking and I can see—
Bryce: Shouldn’t you be sitting in a brown box somewhere?
Chris: Nah, we’re lucky to have it.
Ben: As town planners I’d suspect you’d have that—
Chris: Yeah, that’s right.
Ben: So you’re looking at that beautiful harbour …
Chris: I can see the desirability right in front of me. The sun is shining—Sydney’s a good place to be this time of the year—but as I was talking about … right now in NSW, especially, we’ve got jobs. We’ve got really good employment numbers—I think we’re at 4.8%, which is the lowest unemployment in any of the States, so … You don’t have to be a genius to know that people come where the jobs are and the jobs right now seem to be centralised in Sydney and around Sydney. That definitely leads to desirability and the fact that people want to come here. It’s a curse that Sydney has …. it’s a curse that Sydney is such a desirable place at the moment. It is a good problem to have; but it does have a flow-on effect. And that is what we see right now in Sydney.
Bryce: And you’ve got your geographical challenges too? You’ve got that gorgeous harbor that has some challenges getting across it; the blue mountains and the ocean. So not only have you got the largest population trying to get into the city, but you’ve also got geographical constraints?
Chris: Yeah, absolutely, and we talk about this a lot. Down in Melbourne, you’ve got Greenfield spots than can go as far as they sort of want to go—in that North/North Western direction. I mean, you can almost go to Ballarat, can’t you?
Ben: Oh, yeah, we’ve got plenty of land here. Obviously, Melbourne’s a flat, volcanic sort of “wasteland” in a way—so it’s pretty easy to get there. But obviously with your geographical boundaries and pressures, it’s pretty hard to build on that, you know, granite that is the Blue Mountains and what have you. So it’s a bit harder! But I also note that—to give listeners the idea—Sydney and NSW basically in 2015/2016 generated more jobs than all other states combined! Obviously, Victoria did some of the heavy lifting; but there was zero jobs growth in Western Australia, very small jobs growth in South Australia, small jobs growth in Queensland. And so, effectively Sydney, and particular NSW and even western Sydney—we’ve talked about Western Sydney being the fifth biggest economy in Australia. So, it just gives you a sense of demand. And Chris, that’s what we’re seeing—we’re basically seeing this migration story happening, aren’t we? So can you talk us through this migration and population story that you’re seeing?
Chris: Yeah. What we’ve got, like you said, is the tail end of the mining boom coming off. We’ve got all the mines that are now operational, which definitely require less people in WA and Queensland. Those tradies, those workers who were flocking to those parts of the World to chase the mining dollar are now turning back and heading back to NSW. So I think NSW itself has the lowest net migration out of NSW that it’s ever had. Again, for your listeners to understand: NSW always has a negative net migration. And that has always been a blessing and a curse because pretty much everyone who comes into Australia comes in via Sydney. SO any overseas migrants coming in or anyone who’s coming to travel in Australia usually starts in NSW and then heads to the country following that. So what we’re seeing in NSW now is that negative net migration almost, almost getting to the point where it’s neutral. So, we’ve never been to that point before; it means those migrants who are coming in from overseas are staying put. And we’ve also got a massive number of interstate migrants who are coming back to NSW or looking at Sydney and thinking, “I’m probably going to get a job down here”. And that has a really big impact on this state in terms of the demand and the demand for housing.
Time: 00:15:20 – 00:30:20
Bryce: Do you see any of that changing at all, Chris? In terms of people thinking well you know, mortgages have gone up $1 million for an average house with an hour and a half commute or would they go and take a pay cut in another city where housing is cheaper? You know, Tasmania call it Adelaide. Does your data suggest anything like that might happen now that you’ve been through a really big boom in real estate?
Chris: Well I think the construction cycle we’re on at the moment is still continuing. So we’ve got about 80,000 homes being constructed in NSW at the moment, which is more homes under construction in history. The service industry that drives Sydney is still on the up and I, personally, just can’t see that changing in the short term. But everyone knows these things come in cycles—so inevitably it’s going to flip, it’s going to change, and it’s going to redistribute employment around the country again as another city, another state, has more job opportunities. But in the short term like this, I don’t see that.
Bryce: Sure. How do we compare to other cities around the world that are similar to Sydney. Who do you look to, to get an idea how to get a better plan for the growth in people and the growth in the houses you’ve got to build. What are the world’s cities you keep an eye on?
Chris: Look, again, this is where I get into the data I love. I love data. I don’t know if anyone is aware of this … but there’s this index out by—I think it’s RLB, a consultancy who does the crane index for the world. And what they do is the go and test the number of cranes in cities. And they use those cranes as a bit of a proxy for development and development activity. It’s unsurprising that Sydney has the most cranes than any other city in the country. But also if you have a look at what they do in the global cities—there’s more cranes in Sydney than in all of North American cities that they count. So Washington, Seattle … I think it’s Toronto in Canada and a few others. I think there’s about 6 or 7 of them. Sydney has got more residential cranes than all of those combined. And I think it’s the second highest number of residential cranes in the world that they monitor. And the highest is Dubai, so—we’re kind of “right up there” at the moment in terms of construction.
Ben: So you saying you love the data … what other indexes and data do you use to map Sydney and NSW against the rest of Australia or the rest of the world, Chris?
Chris: Our biggest source is always the ABS. We love the ABS. And have a lot of time for the ABS!
Bryce: Is this cash for comment?
Chris: (laughs). And we’re never going to let the ABS go; they’re very important asset to us; to everybody in this country! SO we use those guys a lot! But we get a bit creative with our data set—so like I said, we use a crane index to monitor activity; there’s also a couple of sites out there that do things like a Tradie Index, which measures the cost of the hourly rates of tradies across the country. So we monitor that to see that to see if there’s a drop off of the hourly rate of a plumber or the wet trades or dry trades and that can be a lead indicator that things are starting to cool down somewhere. And we compare that to what’s happening across the country because there is a lot of debate at moment about the construction in Sydney that it’s been limited not by the supply but by the wet trades. But that’s probably due to all the apartments they’re building at the moment. That could be a factor that sort of limits how we can build in a year.
Ben: It’s interesting, isn’t it? You said when we caught up that between 2016 and 2036 you’re anticipating net migration to be around 1.74 million. And so you’re talking about needing another 725,000 properties over the next 20 years—
Ben: Just to meet demand.
Chris: That’s right … and that’s a lot of houses! Hahahaha. I think it works out to be about 34,000 – 36,000 a year to keep up with that.
Ben: So just on that point Chris—this is where that planning comes in—this is where you have to try and get the mix right. And for our listeners, I mean everyone would love that 600m 2 block of dirt 500m from Bondi or Manly … and you know that land is always under pressure to be re-used. So we call it “back fill” where a single dwelling becomes two or three or rezoning takes shape and all of a sudden that street is now zoned Median Density and all of a sudden you can get 30 apartments on that particular sight. I mean, this is the challenge for it, isn’t it? For planning. There’s always that nod in my backyard—I love the amenity it delivers me in terms of all of the different restaurants and bars and lifestyle choices; but the scarcity of that single dwelling on that single block when we get into numbers like 8 million people living in Sydney by 2051. So how do you go about addressing those challenges?
Chris: Look, it’s a really challenging one. Like you said earlier, our geographical constraints can only go out so far. I mean we can go out but we’ve also got to learn and accept that we’ve got to go up. SO the land that’s scarcity … it’s only going to head one way as the city keeps going and that’s got to keep going up. Because we’re not going to get any more land. So we definitely need to have a good look at yourself and think, “What type of housing are we going to build?” Like you said the Median Density type housing is a great housing choice because it definitely helps us use land in a much better way but it’s also not that “sky high” density that people are fearful of. In saying that though, I don’t think there’s anything wrong with High Density … I think it’s a great alternative to housing if they want to pursue that. What I’m noticing in the data in the history of Sydney—and I’m sure this is similar history to all of Australia, in terms of families—is that historically you would go to uni, find your partner and made set up in and share house for a while and then you might have a family and go out into the suburbs. You get your 3 bedrooms and 600 squares and live that happy, family life. But I don’t think that’s the reality anymore. And what the data is telling us is people are staying put and are having families and staying inside the inner parts of Sydney—having children in 2 bedroom apartments, which is really changing the way this city functions, and the way this city is adapting to the housing development that we need. So it’s a really dynamic environment—it’s changing almost daily in what people are deciding on in terms of housing preference.
Bryce: Well Sydney embraces that more than any other capital in the country, doesn’t it? You guys are building a lot more apartments and it’s not becoming a super supply issue like it is in Brisbane and Melbourne and Adelaide. We’ve said it before—it used to be “Jack and Jill went up the hill to fetch a pale of water”, but now it’s, “Jack and Jill went down the lift to fetch a babycino.”
Bryce: People are really changing the way they see and I think that Sydney leads in that regard. In terms of your role in the government, do you speak to other people in similar positions in other state governments around the country to get some of the learnings? You’d be facing some unique challenges that the rest of the country would love—well, not love in terms of housing affordability—but there are some over supply issues in other states. Is there a collaboration that you get across the states?
Chris: We do a little bit, yeah. We often talk to our colleagues and saying, “What’s going on.” But like you said, with that supply issue, and this is where Sydney is a bit different. I’ve been talking to people interstate and I’ve noticed that Melbourne and Brisbane, especially—that housing supply is definitely a CBD centric oversupply, so very much in the inner parts of the city. I don’t know if you guys agree with me or not.
Ben & Bryce: Yeah.
Ben: Totally yep, that’s what the data suggests.
Chris: Whereas, in Sydney—and I think this is an advantage Sydney’s got—the housing development we’ve got going on is very dispersed across the entire city so you’re getting fairly high-density apartments build 50km outside of the CBD, which is helping with not having an oversupply in particular areas of those housing preferences across the city. Getting back to our colleagues across the border; it’s interesting that we talk about housing choices is a National problem, but it’s definitely dealt with, more often than not, at the State level. But like we were saying earlier, when Sydney cools off a bet—I don’t know, if there’s another mining boom or something; a tech boom in Adelaide, a tech boom in Darwin or whatever—the chances are that Darwin or Adelaide aren’t going to be prepared for it because they have been working off the assumption that most people are going to Sydney and by the time people decided to flip and come over to Adelaide or Darwin or something, it’s probably a bit too late for the planning to keep up with it. So that’s why we always have an oversupply problem. So that’s why I’d like to see a more National approach to this where, even though Brisbane is a bit cool at the moment, there still getting ready for the next boom to hit. Because it will come eventually, it always does.
Ben: Yep. There’s no doubt we’re moving from a population base of say 24 million up towards that 35 million range. So you’re absolutely right. Shelter will always be an essential need for all population coming through, and there will be certain pockets that perform better than others, purely based on what you call “desirability” that we call “living and lifestyle drivers” that will push people in certain areas. And property is a statement of who you are; it’s an emotional asset and that’s why certain areas do better than others. I know you said you live in the Newtown area and you love that sort of vibrant, eclectic arts community. I spent 10 years in Sydney and I have a property in Alexandra there and I love that village and that type of stuff. So these are the stuff we’re looking for, but we’ve also got to be accepting of the fact that our two global cities that are being led by Sydney are going to have that density increase. We haven’t seen density until you seen downtown Shanghai or downtown Hong Kong or downtown Singapore, where that density is incredible. If we look at the Australian footprint—our density per person, per square meter is nothing! But there’s going to be that generational change that needs to happen.
Bryce: We’ve got the empty island syndrome … we’ve got an empty island with a coastal fringe activity spots.
Chris: I always say to people: Sydney and Melbourne want to play with the big boys when it comes to the global cities. We want to get up to that point when we are a global player and a global city/cities. Density is one of the key factors in the key global cities we know about and all go visit, thinking, “Wow. They live very different to us.” So I think it’s one of those discussions that we need to have as a country and as global cities that this is what comes with it.
Ben: I agree. I mean, anyone who’s well-travelled—people who go to New York: I haven’t heard too many people say that they didn’t like New York. In terms of having a look around and enjoying New York. I think the same could be said about Sydney and the beautiful Harbour there. Same with London—I’m a massive fan of London as a city; I think it’s got vibe, real diversity and it’s got history. For Melbourne, we’re big on our culture and our arts and our sport and obviously our education hubs—and Sydney being our financial capital. So from those points of view, they are good foundations on which to build big societies that have a really good standard of living and opportunities to make a lifestyle that they want to enjoy.
Chris: I couldn’t agree more. I think we really are inner city—I think Melbourne is the same but Sydney is slightly ahead—where we’re we are flipping suburban city to urban city. I’m personally pretty excited about that: I love the idea of a real urban city where there are so many opportunities for people to just get out of there and do all that fun stuff that big cities bring.
Ben: I agree. There’s nothing better than, “oh there’s 2 concerts on that night. There’s four musicals; 2 shows, art galleries open; the place is vibrant and there is always that opportunity to enjoy it. But then retreat to your castle. That castle could be in the sky or that castle could be in suburbia.
Chris: Of course it can! As long as it’s well connected and you can get around easily. It doesn’t matter too much that you’re living on the fifteenth floor. Because you get out and about—and you’re probably not in your house that much anyway, because there’s so much fun to do and so many places to go and things to see.
Time: 00:30:19 – 00:47:00
Bryce: Using that as a backdrop Chris, how are you seeing the change in households? You know, “mum and dad and the 3.2 kids” in the 70s. there’s a lot of people living alone and people who are choosing not to have children … so how is that coming into planning, and how do you plan for that? Is it just an extrapolation exercise?
Chris: It’s not so much a challenge as it is working out what’s going on out there. You’re absolutely right that 1 bedroom houses are on the increase—it’s driven by people living alone; but it’s also driven by the aging population. So what we’re seeing in the data is that there’s a lot more single, elderly people that are living alone, which usually is a woman whose husband or partner has passed away and is living in that family-four-bedroom house on their own, and has decided to stay out there and live her life in that family house. We’ll be seeing a massive increase in that over the next 20 years. In conjunction with the fact that there is a lot of younger people getting older and wanting to buy their own piece of housing, or an apartment. So there’s a bit of a conflict we’re seeing at the moment.
Ben: I agree. I want to get into this conversation a bit deeper because I think it’s really important. What people don’t realise is that there is no reason for that lady to get out of her own home. She goes and sees her financial planner and her financial planner says, “Well your principle home is obviously exempt from any means testing, which effectively means: if we sell your $4 million dollar house, or $3 million dollar house, and it’s unencumbered than you’re going to have all this cash. The moment you have all of this cash, all of a sudden the pension is gone and now we’re going to tax you on the threshold that’s on that. So, I think the Government’s going to need to really look at that. I think if we’re going to try this flexibility of movement that there should be some type of exemption or some type of caps to encourage those people to move out of that type of accommodation, which could mean a couple with a couple of kids could live there. Which is far better than a single old lady whose widowed, or a single old man who’s widowed.
That’s the type of policy direction we would like to see from the government regulations to encourage that, as a one off. But there’s got to be a cap on it—I mean, if you’re selling a $10 million of a $15 million property; I think there should be some tax you need to pay, based on the income you’re going to generate with that amount of money. But that’s the story—they go see there financial planner and their financial planner tells them to stay put.
Chris: the other aspect of that that people don’t often think about and that is a lot of elderly people are living in these well-established cities and are mortgage free, but their cash poor. So what happens is that the alternative is to go into some sort of Strata set up; but then they’re slugged with a quarterly strata fees that they’re not used to paying. So, if you’re living in your fully paid-off house and you’re alone in a four-bedroom house then you can make that decision to let the garden grow out a little bit and let your neighbor mow the lawn once every 3 or 4 months. Or you can let that 2nd bathroom fall apart, because you only use one. And you only use the kitchen and the living room so you can let the other two rooms gather a bit of dust. But you’re allowed to make that decision because it’s your house and you don’t have a mortgage on it anymore. You go into Strata and all of a sudden you’re slugged with, I don’t know—$400/$500 a quarter. You would know that figure a lot more than me?
Ben: No, it’s $1000s when we talk about lifts and all the amenities. But I mean you’re absolutely right.
Chris: As a pensioner or a retiree who has a very defined rule card and high costs—and you get that letter in the mail that says, “Oh there’s a bit of a drainage problem and you’re going to get hit with a special levy—that really freaks people out and it should. Because they don’t have the income to find that extra $1000 for the damage. So that’s another aspect that makes it a whole lot less desirable to downsize out for these situations.
Bryce: And you talk about the aging population and how it’s going to effect Sydney. Is there insights that you can give? Are people largely going to stick around the area they’re in or would they move out? Are there any other areas that are likely to get an ageing population than others?
Ben: Sea change, tree change.
Chris: Look I feel like there’s that phenomenon that people like to age in place. And so they should. If someone is comfortable in that suburb, in that community and they’ve built those connections—we shouldn’t be telling them that they have to move out because they’re on their occupying a 4 bedroom house and there is only one of them. That’s not the right thing to be doing to people. What we should be doing though is providing them with an alternative that means they can stay in that community, but downsize to a more appropriate house. And that’s one of the challenges that we have as a government, and something we are looking at and want to keep working on. Because people do like to age in place. There are the sea changes and the tree changes and that sign is definitely now. And what we see now is—and this is something that I think is immerging from it—is we get a cashed up Sidney-sider who’s sold their 3 bedroom house for $2.5 million dollars & moves up the coast and starts buying the coastal properties—you know what’s going to happen then don’t you? It’s going to start pushing up the prices out there! Because there will be a market for that.
Ben: Ultimately, when you build these big, urban cities what you want—and you talked about it before—is ease of access and getting around. Congestion and those types of things are a big problem. Can you share we with us some of the infrastructure that is—obviously we have a whole lot of listeners around the world and outside of Sydney, and the people in Sydney already know about it—called “roadworks” and “delays”?
Ben: You have an enormous amount of projects and an enormous amount of infrastructure—you’ve got trains, you’ve got tunnels; you’ve got light rail. So what are some of the bigger projects that you think are going to make an impact?
Chris: Yeah, I think the Government at the moment is really focused on—I mean, the infrastructure going on in Sydney at the moment is unprecedented. I don’t have the data on me, but it’s enormous. At the moment there is the North West Metro, which is THE biggest Metro project Sydney’s ever seen. It’s connecting the Norwest, which is a huge area for housing growth—a lot of Greenfields out there and an enormous amount of houses going on out there this year. Up until the project, they were only serviceable via a couple of motor ways so there’s a metro that’s getting built there. Trains will run every 4 minutes straight down to the CBD. And that’s going to connect to another massive rail project, which is going to update a rail corridor. It’s a major focus of the Government of urban renewal, where we are going to up-zone and utilise that land and make sure we can get that right density out there. IN conjunction to that, another Metro is also going to go in as well with another 4 minute train that is going to run into the CBD. So there’s Metros, there’s some big road projects going on, there’s a lot of mini projects going around all parts of new housing development that’s trying to open up space—so if there’s a need for a new recyclable plant goes in to open up that big urban housing. And the Government will be focused on getting all of those little mini ones up so we can get into the process of this. So, yeah: huge. Huge amount of infrastructure going on at the moment.
Bryce: Chris, more on that: if you’ve got more population coming that will invariably mean more children, what about school programs? Is there many plans for new schools to be built?
Chris: Well, I don’t work for education; but I do know that there’s going to be, absolutely, a coordinated effort to make sure schools’ are responding to the changes to population. So that means, say for example: Parramatta, which for people not aware of Sydney; it’s about 20 minutes outside of Sydney so is, what we are calling Sydney’s second city.
Ben: If you have to go Parramatta Road, you’d want to go at 4am!
Chris: Catch the train and you can do it in 20 minutes.
Chris: But we’re experimenting with different ideas like high-density schools—So schools that go up, not out—so more like your Japanese schools: in towers as opposed to being larger pieces of land. I know education is looking at solutions. Because there needs to be enough schools for everybody.
Ben: Look, it’s going to have to be a part of the mix in terms of what it looks like. Because in these urban cities … they go up. The sky is the new soil. So from that point of view I can completely understand.
Bryce: Well, we had Nigel on last week—they can go up on those towers and see a virtual oval and kick the footy with your mates!
Chris: It’d be kind of cool to play basketball on the fifteenth or twentieth floor of the tower, looking over at the city skyline. I reckon I’d love that if I was a kid.
Ben: Well the golf driving ranges are a lot of fun, up in the sky. If you’ve ever been into Japan or into those markets, they have these golf driving ranges that just randomly appear as you look out over the city. It’s like, “Okay, fair enough!”.
Chris: it’s one of those things that—I’ve been over to those cities—and you think, “Man, this is really cool” and then you think, “Sydney’s not that far away from it”.
Ben: And it’s going to have to be a part of the mix—it absolutely has to be a part of the mix. So Chris, obviously you are in government so you probably have to be careful in what you talk about here; but if you had the key to the city … what sort of things would you like to be seen done that you think that could have a very big impact on housing affordability? What would be one of the main things you think governments or communities or business ventures need to address to try and make housing a little more affordable?
Chris: I think it’s really about the diversity of that supply. I think supply is the key issue with this housing affordability issue. I think once we get the supply back up—and we’re doing that I think: Sydney’s building more homes than it ever has before—but, for me personally, it’s the diversity of supply. So it’s making sure that when you build a new apartment block or a new high-density precinct that we make sure that they are still affordable housing for people, that we make sure there is a lot of universal principles that apply to those apartment blocks, so that it’s suitable for a family and also for someone who has mobility problems. If someone’s got a wheel chair or a walking frame … they can also live in that apartment. So, I’m a big fan of universal design and making sure that our apartments respond to that. And also making sure we have that mix and diversity in our apartments—so there’s 1 bedrooms, 2 bedrooms, 3 bedrooms, studios, or it’s 4 bedrooms on two levels for people who really want to expand and have that family life in an apartment block. But also, medium-density: getting creative with our medium-density so we can utilise our land more. Really just having that conversation about the fact that we are changing in Sydney, and as much as people are scared of it—and I can see why because it changes the way you function in the city. I live in Newtown like you said—and right next to my house, they brought seven stories and 222 apartments. And a lot of people in my area were absolutely petrified. I wasn’t too worried about it—I’m a bit more of a realist when it comes to it, and I live in the city and can see that it’s necessary—and the end result of that development was that people were going, “Oh it’s actually not that bad … it hasn’t affected us all that much”, and I was like, “Yeah, I was telling you that but umm …”
Chris: It’s the fear of the unknown, that’s all. So making people aware that it is going to change; but there are a lot of benefits to it as there are challenges.
Bryce: Well, that just goes to show you can’t be a prophet in your own village. When you’re planning these expansions of cities, does the high-speed, or the potential high-speed rail, ever come up in discussion because we know there’s been a few goes at it but it hasn’t quite got off the ground? Surely that’s becoming more front-of-mind for those that are planning for the next 20 – 40 years?
Chris: Look, I mean I can only comment on that personally. I haven’t had that discussion—I mean we talk about it in terms of what would work to connect cities together, absolutely—but whether or not the government is looking at that; that’s something I probably can’t talk about because I don’t have a good handle on it. But I’m sure people are talking about it, I can’t see why they wouldn’t. It seems to me to be a good idea to me, there’s no doubt about that. And it’d be great to be able to jump on a train and get to Melbourne in two hours. What I love about High-speed Rail is when you get out of that train, you’re in the city. You’re not in an airport, 45 minutes away. You’re right there in the middle of town. So, yeah, I’d love the idea. I think it’d be a great idea.
Bryce: So, let’s talk about something you can talk about. What do you think about our current NSW premier? Is he performing well?
Bryce: I’m joking. She! That was a joke.
Ben: So just on the automation piece—talking about technology and innovation—have you been exposed or is there any penetration into planning and department around Hyperloop or automated cars and potential drones’ transportation? Is that all being talked about? Because there’s obviously projects happening around the world, looking at those types of transportation solutions. We also saw Elon Musk talk about going underground … probably to keep the need for car’s going—doesn’t want to see them off the road just yet. But the reality is there is going to be tunneling and all of those options. Is that getting to your level of government yet? Is anyone looking long-term planning … say the next 20 – 25 years?
Chris: Again, it’s something I haven’t had a personal involvement in; but I have no doubt. I think when we talk about—when I talk to my colleagues about this, and it is something we do talk about—is that in the planning space we need to be a lot more adaptable. So, our Chief Planner for NSW is on this—and has presented a lot of information about how we have to be more adaptable. So, you guys would know this, and I would know this: being a comfortable, middle-aged man; things have changed quicker than they have before. And when something takes hold—it takes hold quite quick. I was having a chat about it this morning—my wife and I were talking about Smart phones and how they’d only been around for a decade. And that’s nuts! Because our entire lives now pretty much revolves around the connection and the usage of those devices. And there’s no way that that type of change is going to slow down … it will speed up. So, yeah, we absolutely have to get a lot more adaptable and respond a lot quicker when these changes hit. Because when these technology changes hit, they hit hard. And they’re going to really impact cities.
Time: 00:47:00 – 01:00:54
Ben: They are. And we don’t necessarily want to be preparing for high-speed rail when it’s going to be redundant in 25 years. You know, we want to be looking at technology like Hyperloop and those types of things to potentially move people. Listeners, if you haven’t looked at Hyperloop just google some of the videos. It will be a bit scary. We’re talking about land transportation that moves as much as 780 miles an hour—so we’re talking about 12,000 kilometres, so as quick as aircraft travel along the ground. In, basically, these chambers that don’t have that resistance and that’s how they’re able to move and not have the heat that’s generated through resistance. So, it’s some fascinating stuff. And, obviously is of interest to me and we’ve had the Chief Inventor of the REA Group recently on the podcast—so this stuff is real. And as property investors and buyers we need to know how it’s going to change our lives. Like, personal assistants are going to play out in the years—these automated personal assistants are going to plan an enormous role in our lives to get organised and organise, basically, our data. And that can change the way we live in certain cities or different locations. We could go a tree change or sea change. So that’s pretty exciting stuff—and it’s pleasing for me that I’m hearing that the government are aware of this stuff and they’re looking at it at that senior level.
Chris: Absolutely. And I’d like to think that this type of thing will make regional centres more appealing. The regions of this state—same with Victoria and Queensland—they’ve got so much to offer in term of lifestyle and great housing, great places to be and great communities—but it’s really the jobs that are holding them back a bit. And we’re only going to get a little bit more tech savvy so that proximity to the city will become less because we’ll utilise tech more and you can travel faster … so who knows? Open up those regions a bit more so there more desirable places to live and puts less pressure on the city.
Ben: I totally agree 100%. I’m on record to say I would move out into the great divide and into the golden Murray region because the weather’s spectacular—the golf course, the choices, the fishing; the lifestyle’s amazing—and if I could get to Melbourne in an hour, and be productive in that hour; I’d do it. I don’t necessary need to live with neighbours that are fifteen metres away from me.
Chris: No, not at all. I grew up in the Blue Mountains—which is about 100 kilometres west of Sydney, up in the World Heritage national park up there. Pretty ideal place to live as a kid and grow up, but Sydney was a bit of a magnet for me because that’s where the jobs are. But, yeah, if I could physically tap into Sydney to be here once or twice a month or something to work than it might change my lifestyle choice.
Bryce: So in conclusion Chris, I guess Sydney’s just had a perfect storm in terms of, you know great economic growth, jobs growth creation up there and the huge desirability—and on the backdrop of low interest rates … largely, as a world’s city it was inevitable wasn’t it?
Ben: An undersupplied for years.
Chris: I guess that’s the one thing we didn’t touch on; but I think it was the period between 2005 and 2010, we really turned off the tap and housing supply dropped. So even when this housing boom started, housing construction kind of picked up and the population started to really increase, we actually had an undersupply of 100,000 homes already. So, we actually started quite a long way back—and I feel like we’re catching up pretty quickly; but there’s still a long way to go. But yeah, you’re right.
Ben: You’re data suggests that you have another 185,000 new houses in the drawing-board for the next five years so that’s obviously on the way to that 725,000 target that you were talking about before.
Chris: Yep. And what I also say to people in the walls of this Planning Department, but also around the history; is that even though everyone talks about this word, “boom”—it’s a scary word I think. Because inevitably at the end of the boom there’s always a “bust”. But what I feel like is that this should be the new normal for us.
Bryce: Well, that was going to be my next question. Because there’s no necessary sign of that perfect storm disappearing in a hurry.
Chris: No. I find that there might be a bit of a stabilisation—so, again, ABS is telling us that we’re approving about 70,000 houses a year at the moment. 71,000 – 72,000 a year. Which has been consistent at that level for the last 3 – 4 months. So that’s well above the decade-averages of around about 50,000. So we’re well and truly above what we need. But I think we need to sustain in all of Sydney, at least in the immediate future. And, like you said, I can’t see it slowing down.
Ben: I think that’s a good news story. This whole idea of a “big bubble” that’s about to take everyone out, or people who are sitting back, saying “I’m just going to wait for the market to correct in Sydney and it’s going to correct by 30% or 40%.” But the data just does not suggest that. All of the underlying pinnings, the fundamentals, just aren’t suggest that at all.
Chris: You’re exactly right. And the fundamentals are there. The fundamentals are strong. There’s an increase in inflation by a natural increase—so people having babies, some getting older—and there’s also good jobs in Sydney. Well one of the other stuff I think I said, which really got wind when one of my colleagues said this: if we actually stopped migration in Sydney, completely stopped it from states and international, and we stopped having babies right now … in the next 20 years we still need 140,000 new houses to accommodate the people moving through the lifestyle; like growing up and buying a house or aging in place! So that’s a big number.
Ben: That’s a great state to remember.
Bryce: You heard it here first on the couch, Ben!
Ben: Yeah. I think that’s a great start to finish on. I really think so. Chris, I really appreciate your time and, obviously it’s great meeting you. I think we should check in on an annual basis to see what you guys are getting up to on the Planning level and what’s happening up there. Because it’s really important. At the end of the day: you’re the gatekeepers; you’re the ones’ driving policy; you’re driving the Planning story for Sydney and all of NSW. So it’s an absolute pleasure and privilege to have you on the couch and to tell us a little bit about what’s happening in the NSW Planning Department and also what the plans are for Sydney.
Chris: That’s sounds great!
Bryce: Yeah, I’ll second that too Chris—it’s been a pleasure. Ben said to me after he came back from the Housing Affordability Conference where he meet you, “Mate, we’ve got to get Chris on! We’ve got to get Chris on—he’s got some great stuff and he’s great to chat to.” So, again we appreciate your time.
Chris: Nah, it’s alright. I can talk about this for days and people get sick of me talking about it, so I’m glad I’ve got a couple of ears.
Bryce: And just a few extra listeners as well! Good on ya Chris. As Ben said, we’ll check in with you again and thanks for coming on the couch.
Chris: Yeah, it’s been my pleasure guys. Thanks for having me—it’s been fun.
Bryce: Alright, Ben, how good was that! It’s not every day you get someone from the government come on every day. I can see now why you said to get him on.
Ben: He’s passionate about it—and the best part is he’s got a good story to tell. It’s a good message, but a challenging message: housing affordability is not easily solved. But you get everything in context, don’t you? And we keep coming back to this—it is a supply and demand story. It’s as simple as that. Undersupply before the boom started; they’re trying to catch up; they haven’t caught up yet. So it’s still very much a story of strong demand and tight supply. And that’s causing the values to keep moving higher.
Bryce: And to quote Chris: “I love to find creative solutions to people’s problems using data and analysis. I particularly love predicting the benefits of a project”. So he clearly loves his data, loves what he does and has a nice lifestyle there in the inner west of Sydney—life’s good. So thanks Chris for coming on. Hey my Life Hack’s pretty quick Ben: in our household, we probably go through a minimum of 50 eggs a week. Did you know that?
Ben: Fifty? What are you growing them and hatching them and eating them like chicken breasts?
Bryce: Mate do you know that the yolk is the most healing part of the egg. Here’s the life hack: we get 6 egg yolks—not with the white—put them in the Thermos, add two teaspoons of honey and put into on for 3 minutes at 60 degrees, speed 4, and it makes the most amazing custard, which the boys can eat. And the gag for it! So we go through A LOT of eggs!
Ben: What do you do with the whites?
Bryce: Well, we freeze them for Pavlovas mate.
Ben: I love it because—have you got a greeny bin?
Bryce: Well, yeah. Ivise is saying that we wipe it on our face … no we don’t. We probably haven’t found a very good use for them because we don’t eat Pavlovas a lot.
Ben: Maybe they can help with your push-ups? So you can prepare for the beach!
Bryce: Mate, I am still doing those 10 … so don’t worry about that! Hey so here’s another one for you. So we cook a lot of eggs—we scramble them, we poach them, we have them rushing custard and stuff—steaming eggs, ben? Put the steamer on the hot plates for 6, 7 or 8 minutes, whack the eggs in for 9 minutes.
Ben: So not boiling … steaming?
Bryce: Yep, and so here’s the magic. Another life hack! When you boil them, what do you have to do? You have to take every little mosaic off, which takes forever. If you steam them—Ivise I’ve got your attention; I like that— when you steam them (9 – 12 minutes depending on how hard you want the egg), once there done, put them straight into a bowl of cold water, right? And then crack them. The egg shell just peels off … sometimes in TWO sections. So for those people who love boiled eggs: try steaming them! And they’re more fluffy!
Ben: More fluffy!
Bryce: There you go! I know, I know. Ivise, taste great!
Ben: Why aren’t we doing a cooking show? I mean this is great.
Bryce: Mate, that just goes to show that I eat my eggs and grass. But there you go guys … try it! Steam your eggs rather than boil them! Did you know?
Ben: Did you know Bryce—a couple of did you knows. I’m getting older and I absolutely need glasses—
Bryce: At your age you should mate.
Ben: So I’ll start with the first one. True. Well, 47 now!
Bryce: Not a youngen’ like me
Ben: Birthday boy as of yesterday so thank you very much for acknowledging that for me, so there you go. Don’t worry about that, we’ll move on.
Ben: This is not about me. Ivise is now giving me a cuddle saying, “Happy Birthday.” Well, it’s not about me. Let’s move on. You cannot stop …
Bryce: It’s not about him but he said that three times. Ahh…
Ben: (Laugh) You cannot snore and dream at the same time..
Bryce & The Stig: (Laughing at the background)
Ben: You cannot snore and dream at the same time..
Bryce: Well you don’t do a lot of dreaming then?
Ben: No I don’t! But I do plenty of snoring. Now into the more interesting stuff.
Bryce: Hang on, can I just put a quick word in there?
Bryce: So in our conferences, you obviously got to share accommodation with poor old Jamie from Sydney.
Bryce: And then we are about to go to America, the three of us…
Bryce: And I’ve got to share with you so..
Ben: Yup, ear plugs!
Bryce: I’ve got to get heavy duty ear plugs don’t I?
Ben: Yeah, you can sleep in the bathroom.
Ben: Now, a couple on lightning. Did you know that men is 6 times more likely to be struck by lightning than women? And I tell you.. Sometimes Jane would wish that I get struck by one. She would like see my numbers grow at that space.
Ben: So there you go. Six times more likely. And here’s one that completely blew me and I don’t even know the science behind this but apparently bolts of lightning can shoot out from an erupting volcano.
Bryce: Fair dinkum?
Ben: How does that work?
Bryce: I don’t know. I’d like to see that.. Only on YouTube though.
Ben: So talking about the little icon on our website. If you know how lightning will actually shoots out from an erupting volcano, can you let us a voicemail? I want to hear from any of you scientists out there. Leave us a little voice message and we’ll play it on the podcast.
Bryce: It’s a very good point you made Ben. We can use that voice mail for people to leave me life hacks..
Bryce: Oh mate, seriously. You are really growing in that Did You Know segment. That’s really stretching minds.
Ben: Oh yeah! I’m embracing it Bryce, I’m embracing it.
Bryce: I know, I know. So there you go folks. Again we’ve got some terrific insights into the NSW and more specifically, the Sydney market today which had been terrific and lots covered off that. And mate, look, we still got terrific guests coming including at the end of the month, an international sport star who we will not be telling who it is yet..
Ben: Nop, it’s a surprise
Bryce: But it’s huge!
Ben: Yup, HUGE! (Laugh)
Bryce: Huge! So stick around for that. Stick around Awe-Guest
Ben: Awe-Guests.. there we go. Oh! Hashtags!
Bryce: Yes, #AweGuest. Thanks to the Stig. So er.. Mate, until next week?
Ben: … Until next week Bryce..
Ben: You almost had me just now. See I was ready. I was ready! Knowledge is empowering but only if you act on it.
Bryce: Mate, you’ve got wisdom beyond your ears. So of course, until next week mate?
Ben: See you later.
Bryce: See us later.