There certainly weren’t legions of planners in government offices trying to exert a command and control influence over community choice by wielding an ideological stick in the form of planning policy.
Instead “back in the day” there were a handful of city engineers, and applications for development tended to be approved if they met basic building code and engineering guidelines.
With this absolute minimalist approach to regulatory intervention in urban growth, we created large, efficient cities which somehow got it right.
The roads, railway stations, commercial developments, hospitals and all sorts of community facilities and parklands grew mainly in response to market forces – shaped by consumer demand. Where people wanted to live and in what types of homes they wanted to live in created demand that developers responded to.
Whole suburbs were developed in this way, and housing was affordable. In response to this, other developers identified opportunities for shopping centres, workplaces and other projects. Transport connections were delivered in response to the market driven locational choice of our urban inhabitants, and with them were developed the medical facilities, community facilities, parks and public spaces that also helped shape the character of our urban form.
This largely market driven approach is how most of our major cities were shaped, with the exception of Canberra.
Not only was the vast majority of our current urban form delivered without the benefit of complex regulatory planning, but apparently it was so successful that huge swathes of the community now believe that much of it should be protected from any re-development.
This is a sweet irony: the structures and precincts that were originally created with a quick ‘how about we put it there’ discussion and approved for construction with basic plans in a matter of days (no one had heard of an EIS) are now the subject of fervent protectionist instincts.
These are from among the same sections of the community that talk loudest about the need for even more government planning and development control. They’re actively espousing the conservation of an urban form that reflects a period of minimalist or non-existent planning.
But this same coterie of voices that champions preservation of suburbs, precincts, places and structures created by developers unassisted by the guiding hand of a regulatory planner, also somehow believe that only highly regulated controls over developers can achieve similar outcomes in today’s world.
The community now views developers with suspicion and somehow we now place our trust in the hands of regulatory urban planners and academics, many of whom have never in their life built so much as a Stratco garden shed.
This seems to be a widespread community sentiment which is a great shame because the longer it goes on, the more we are deluding ourselves about how our cities really grow and respond to the needs of their residents.
Will it ever change? No, I think that horse has well and truly bolted. But it could be worth reminding some of the loudest voices in favour of more and more regulatory control of a few home truths. Here are some of my thoughts:
Developers Know The Market Best
You can assemble as many thinkers and urban planners and futurists in a room as you like but the moment someone has to risk their own money on a project, the room clears. Those left are the ones who truly know what a market wants in a particular location and what they’re prepared to pay. They know the costs of delivery, the risk of time delay and the risk of market change. In this way developers are more acutely tuned to real consumer and business community demand. Their views could be more widely sought and respected in terms of what can work and what won’t when it comes to urban planning. Otherwise we create plans which aren’t based on reality and which – for that reason – are difficult to deliver without excessive taxpayer support.
Developers Tend To Be Ahead Of The Trends
There’s nothing like a market driven psychology to keep you on top of trends and to know how fast they’re changing, and in what direction. Regulators on the other hand tend to learn by third party reference, through various conferences, talk fests and media reports. These are often well behind the trend because they’re referencing something someone else has already done. Once again, I’d be more inclined to put my faith in the views of a few developers when it comes to knowing the latest trends than an entire roomful of theorists who aren’t in the business of risking capital. Especially their own.
We Need Developers
The anti-development voices seem to think that taxpayers and governments are the means to improved urban environments and that developers should be highly controlled and their role limited. But without developers and the private capital (not taxpayer dollars) they bring to projects, all the plans in the world will never materialise. It’s the developers who create the houses, the shops, the cinemas, the restaurants, the coffee shops, ‘green star’ offices, industrial workplaces, medical centres, tourism resorts, hotels, theme parks, and other attractions that characterise where we live, work and play.
Today, developers are also increasingly providing schools for our children and public parks, particularly in master-planned estates. They are providing aged care and retirement living for our seniors. Private health organisations are developing new and world class hospitals, operating theatres and health facilities for large cross sections of the community, usually at lower capital cost and greater operational efficiency than traditional government delivery models.
We are surrounded by the results of development and this development was in the main created by developers risking private capital to meet a market opportunity. We are not likewise surrounded by the evidence of unwieldy regulatory planning instruments which impose needless delays, are unduly prescriptive and rarely in tune with community or market need.
Does this mean there is no role for regulation of urban development? Of course not. Public policy should reflect community opinion in any healthy democracy, and this in turn should shape the future growth, development and redevelopment of our urban landscape. It should encourage and facilitate private capital that aims to meet a community or business need. It should not reflect the minority views of unelected policy makers, nor resist market forces which are clear signals of need and demand, nor treat applications for development with deep seated mistrust and suspicion.
If developers and private development generally managed to create entire cities across Australia with considerable success, unaided by the heavy hand of prescriptive regulation, how is it that we came to this view today that developers are the enemy of efficient urban development? And how is that re-development of areas that are reminders of historically unrestrained development is now opposed in the name of ‘heritage’ conservation?
Maybe it’s explained by the word ‘profit’? Is it possible that we’ve come to view profit as a dirty word, rather than a sign of something successful? Does it mean that community opinion is more likely to support taxpayer funded developments which consume precious tax dollars (at a loss) as preferable to privately funded developments which actuallycontribute to the community tax pool (by making profits)? If that’s the root of the problem, the problem is much larger than we might care to imagine.
Experts warn of ‘debt bomb’ as housing downturn worsens
That’s according to the sobering 60 Minutes segment Bricks and Slaughter which aired last night, revealing the country’s property downturn was just the tip of the iceberg.
According to reporter Tom Steinfort, the current slump is actually “more like falling off a cliff”, with a number of real estate and finance experts claiming houses could plummet in value by up to 40 per cent in the next 12 months.
If that happens, it would also cause an economic “catastrophe”.
Mr Steinfort spoke with data scientist Martin North from Digital Finance Analytics, who said Australia was uniquely vulnerable when it came to an economic crash tied to a property downturn.
“At the worst end of the spectrum, if everything turns against us we could see property prices 40-45 per cent down from their peaks, which is a huge deal,” he said.
“That’s higher than any other country in the Western world by a long way.
“There’s probably no country in the world more susceptible to the ramifications of a housing crash than Australia. We are uniquely exposed at the moment.”
Mr North said Australia was now in the same position as the US was back in 2006 and 2007 — a position which triggered an economic collapse.
“As a society, and as a government, and as a regulatory system, we’re all banking on the home price engine that just goes on giving and giving and giving. It’s not going to,” he said.
“We’ve got a debt bomb, we’ve got a debt crisis and at some point it’s going to explode in our face.”
He said foreclosures had also risen by 600 per cent in the region.
“The mortgage stress is definitely being felt especially in this area,” he said.
60 Minutes also spoke with several Aussie homeowners who gave harrowing details of the stress they faced trying to pay off their mortgages, including having their power turned off and being “hounded’ by their banks.
What does a million dollars buy in Aussie capital cities?
Market analyst Louis Christopher of SQM Research said the market had been “clearly overvalued”, labelling the downturn as the “correction we had to have” — at least in Sydney and Melbourne.
“On our numbers, Sydney was effectively over 40 per cent overvalued. And Melbourne was overvalued by about the same amount,” he said.
But property investor Bushy Martin said the blame lay squarely at the feet of buyers who “mortgaged themselves up to their eyeballs” in a bid to snap up dream homes before being able to afford them.
However, the segment has also sparked backlash online, with some claiming the situation had been exaggerated.
One Reddit user branded the report as an example of “alarmist journalism and scare tactics”, while another said it was “dramatic and cringe-worthy”.
Others also criticised the segment for making it seem like all homeowners would be affected, when the downturn was actually mainly focused in the NSW and Victorian capitals.
And some said it was unfair to blame the banks for the situation, and that homeowners needed to take responsibility for their own decisions.
That was in response to comments made by one homeowner on the program, who said the bank had “suddenly switched the mortgage to interest and principal”, raising his repayments by 57 per cent.
“The interest only part annoyed me the most. The bank didn’t ‘suddenly change’ your repayment from (interest only) to (Principal and interest) your IO term expired. You a) knew this would happen and b) assumed the bank would renew it when it expired. I hope this speculator gets burnt first,” one Reddit user said.
Related article: Experts warn of ‘debt bomb’ as housing downturn worsens
Queensland is the next property hotspot, experts say
As New South Wales and Victoria continue to experience weakness. Queensland is expected to take the lead, a National Australia Bank (NAB) poll of property professionals revealed.
According to the survey, industry experts project house prices in Queensland to increase by 0.7% next year and 1.3% in two years.
Some areas seen to perform strongly over the next year include Brisbane, Cairns, the Gold Coast, and the Sunshine Coast. Out of the suburbs, Coomera and New Farm are expected to realize robust gains.
Meanwhile, Queensland’s rental market is also poised to enjoy an upward boost, growing by 1.3% next year and 1.9% in two years. This is despite the stricter rules on housing investment.
The respondents of the survey also expect Queensland to retain foreign buyer interest. In fact, the share of foreign sales hit a four-year high of 22.8% over the previous quarter.
The results of the survey go against NAB’s own projection of the market. For instance, the bank expects house prices to remain flat in Brisbane over the next three years. Unit prices, on the other hand, is seen to fall by 4.5% over the next year.
NAB chief economist Alan Oster said Brisbane’s housing market seemed to be going sideways and its unit market still creates concern.
“It hasn’t peaked yet, so that’s good. We’re seeing quite strong economic activity in Queensland, so that always helps,” Oster said, as quoted by The Courier-Mail.
Gold Coast house values record the biggest growth in Queensland
The Gold Coast has recorded the strongest growth in house prices in Queensland over the past 12 months.
GOLD Coast house prices are leading the way in Queensland, up six per cent in the past 12 months to an average $620,000.
The latest figures by the Real Estate Institute of Queensland show homes on the Glitter Strip are $35,000 more on the same time last year.
Unit prices are up 1.9 per cent to $428,000.
REIQ data reveals houses on the Glitter Strip are worth $35,000 on the same time last year.
REIQ’s Queensland Market Monitor for March said the strong population growth came on the back of infrastructure projects such as the $550 million Gold Coast Health and Knowledge Precinct and M1 upgrades.
“The property market has been one of the big winners from the sporting event as the $1.5 billion infrastructure investment has boosted confidence and demand for housing in the region,” the report stated.
“We expect house prices will show an upward path in 2018. However, this growth will most likely be more moderate.”
A quiet real estate period leading up to, and during, the Commonwealth Games likely contributed to a slight drop (-0.3 per cent) in the March quarterly median sales price, the report reveals.
Andrew Henderson says a growing population and employment opportunities were contributing to a strong property market. Picture: Jerad Williams
REIQ Gold Coast zone chairman Andrew Henderson said he expected interstate migration to continue to benefit the city.
“I expect the market to remain strong,” he said.
“There is a heavy amount of interstate buyers moving here.
“I was at an auction recently where the winning bidder was from Sydney and the underbidder was from Melbourne.”
Mr Henderson said growing employment opportunities were also attracting homebuyers to the city.
The Gold Coast property market is expected to remain strong.
“We have some of the best health facilities in the country and our universities are world recognised.
“Those two things alone complement the tourism industry and the lifestyle aspects that the Coast offers.”
The report found the fastest-selling suburbs on the Coast included Worongary, Merrimac, Highland Park, Mudgeeraba and Carrara.
It also revealed the rental vacancy held tight throughout the first quarter of the year at 1.1 per cent.
Andrew Bell says the Coast had evolved from a tourist town into a vibrant city with an expanding economy. Picture Mike Batterham
Ray White Surfers Paradise Group CEO Andrew Bell said the Games heralded the next chapter for the Coast, as it evolved from a tourist town into a vibrant city with an expanding economy.
“The city’s property market is riding the irreversible momentum that has now come to the Gold Coast in terms of economic diversity and with more employment options we will need more housing options for people,” Mr Bell said.
“We are no longer going to be subject to tourism upsides and downsides as we were in the past because our economy has well and truly diversified beyond just tourism.”