Final Trends for 2017
This post is my final Trends summary for 2017 as next week I’ll start to review 2017 and then look forward with what market conditions could prevail in 2018. I’m just rummaging around my desk now looking for my ‘crystal-ball’ and Windex to polish it.
To wrap-up I’d like to refer to a recent up-date from the Productivity Commission [Shifting the Dial: 5 Year Productivity Review] and highlight a half-dozen key points, some have been talked about already, but they all make interesting reading and they all impact the property sector and people who live in cities, and that’s most of us.
Our Cities are Economic Drivers
Our largest cities (with a population of 100,000 +) account for 80% of our GDP. Sydney and Melbourne alone account for 40%. Capital cities account for two-thirds of employment and 80% of recent employment growth. The importance of our cities has an over-riding impact on the demand for services and housing. They are predicted to have 10.8 million more residents by 2050 which graphically highlights the essential role of planning to keep pace with the demands more population will create with housing supply a central issue.
Immigration growth drove 60% of national population growth over the past decade. This has a big impact on cities because that’s where the bulk of temporary immigrants live to gain access to education and work. And when they do settle, the majority of permanent migrants not surprisingly choose to settle in our capital cities. Well-targeted policies can and do have a positive impact, however fractious and drawn-out policies create problems that are often sighted as for example restricting the supply of new housing. Perhaps more flexible, customer-focused planning policies are an essential way to manage the continued growth of our cities.
Land Use Planning
The determination of land use policy has a significant influence on the demand and value of urban lands, and planning issues are central. Planning policies impact every aspect of how cities develop and how services as diverse as housing, telecommunications and transport are delivered. This might be self-evident, however poor planning restricts the ability of a city to absorb more population and attract skills. There’s a clear need to allocate enough land to meet all levels of demand and to balance the cost of delivering new developments.
How our Cities Function
Australian cities perform well by some international standards: built environment, air quality, energy and water efficiency. Crime has remained stable, although property crime has increased in some jurisdictions. Although Australian cities also perform well in measures of social cohesion, reflecting in trust, safety, health and sense of community. But when it comes to transport, roads and congestion the picture is not so positive. It’s been estimated that the growing avoidable social cost pf congestion for our eight capital cities was estimated at $18.7 billion in 2014-15 and that might increase to at least $31.4 billion by 2030.
How cities work is tied to the quality and reliability of public infrastructure and while there’s a current boom in many areas it’s been suggested delivery needs an overhaul of process, assessment, investment and delivery of new projects. Based around sound cost-benefits, more community involvement by those who pay and use the services, more detailed evaluation of outcomes and better long-term planning. According to the PC despite some recent changes there continues to be examples of poor, very costly infrastructure investment decisions.
Could do Better
The Productivity Commissions report, has a ‘could do better’ section with the type of comments we might expect, these include: improvements in public infrastructure, in particular much better road transport, a focus on planning and land use policies and a review of conveyancing duties (stamp duty) which distort market demand and people’s willingness to move. One final point questions the varied roles of Local, State and Federal Government in urban policy. Long the preserve of Local and State Governments, but with funding from the Federal budget. However, the Federal Government has now indicated an intention to intervene beyond its traditional role, hopefully with improved outcomes, although that’s yet to be seen.