Why we can’t fix the chronic undersupply of housing

If you want evidence on the fact that higher house prices in our capital city are structurally locked in, take a look at this story here.

It’s about a proposed high-rise development at Waterloo, on the outskirts of the Sydney CBD.

“Seven hundred apartments will be built on a large block around a new rail station in inner-Sydney Waterloo, government documents show.

The Waterloo “Metro Quarter” proposal by the government’s UrbanGrowth Development Corporation and Sydney Metro, made available on Wednesday, includes four residential towers of 29, 25, 23 and 14 storeys.

Much of the development would occur at the same time as construction of the train station, which will form part of a new metro line connecting a new route under the central business district with the existing Bankstown Line.”

Sounds good right. But people are worried. There are concerns that the towers will be too high and too dense.

The CEO of the company behind the development was trying to defend it:

“The chief executive officer at UrbanGrowth, Barry Mann, said the three taller towers needed to be seen in the context of the area: there would be a rail station directly underground, Redfern Station a short walk away, while the block would be divided with roads and pathways.

“The scale of it is not overly dense I don’t think,” said Mr Mann.

“It’s a logical place to put more housing for the people of Sydney, and more social housing.”

You’re not kidding. It’s pretty much in the CBD, within a stone’s throw of dozens of other high-rise towers. There’s heaps of public transport (there is literally a train station underneath it!)

It’s got to be the most logical place in Australia to build higher density housing.

And yet, even then, there’s a struggle to get everyone on board with the idea.

And the developer has to spend millions of dollars managing the project’s PR and ensuring that the anti-development lobby doesn’t through any roadblocks in his way.

And we wonder why there’s a shortage of housing. We wonder why house prices are so expensive. We wonder why our kids can’t afford to buy.

But this is the crazy thing.

The development is going to create 700 apartments.

On average household sizes, that’s homes for about 1400 people.

But Sydney added over 150,000 people to its population in the past year alone.

So we’re talking about 1% of the housing that’s needed… in a single year.

Or put it another way, this project will soak up about one week’s worth of the demand that Sydney’s added last year.

One week!

There’s a bun fight over developing the most develop-able block in Australia, and all it’s going to do is soak up just one week’s worth of population growth?!?

This is the reality of housing in Australia.

It’s why housing remains in chronic shortage.

And why house prices just go up, and up, and up.

Spiro Kladis
Managing Director, Cashflow Capital

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Leave A Reply (2 comments so far)

  1. Gary
    5 months ago

    It’s worse than you say. Once the developer does get everyone on side and gets approval then the council hold their hand out for infrastructure fees, planning fees etc. Then the Office of State Revenue come along and want land tax on the improved value of the block. It never ends. I am with you Spiro. There will always be a chronic undersupply of housing and where it does get built it will be expensive for anyone to buy it.

  2. Lindsay
    4 months ago

    I appreciate your insights Spiro. You can discuss an issue on its merits, rather than on self-interest. I am a courier. I ply the streets of Melbourne for a living. I see apartment after apartment complex being built here there and everywhere. Even an upmarket suburb like Doncaster has multiple high rise buildings that look like housing commission from some perspectives,yet they have just been built.I agree with Gary. The authorities dont give a ‘frogs foot’, as long as the money rolls in. Then there is the traffic but lets not go there.
    So whats my point? Random buildings everywhere make developers rich, dont address housing needs as per your analysis Spiro, concentrate living in one area and are costly for what they offer.
    Whats my solution. Leave the suburbs alone.The only option is decentralisation. I would build a place like Morwell up big time.Since Dreamworld Brisbane is cactus, build the biggest theme park in the world. Man it with human bilbys and quokka’s instead of Mickey and Donald.Use the revenue to build a giant defence facility that could blast a chinese warship back into Aussie iron when it docks at Vanavatu in preparation for its takeover of Australia, whilst idiot aussies are averse to engagement with current affairs. Then from Morwell, I would ask the Japanese to build a high speed train (560kph) to Melbourne so as to cater for Melbournians wanting to work in Morwell. My vision would solve a lot of problems. What do you think Spiro?

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