‘Rosy future’ for medium-density housing
A “rosy future” for medium-density housing driven by an ageing population will ensure the property sector is reasonably strong for the longer term, CSR chairman John Gillam has predicted.
Mr Gillam told the Melbourne Institute/The Australian Economic and Social Outlook Conference yesterday a fundamental shift was under way in the housing market, as rising immigration and birth rates pushed annual housing starts from a traditional 150,000 to between 175,000 and 180,000, and baby boomers downsized from large detached houses.
“They will be looking for something that is more attractive and easier to maintain. So what that means is medium-density housing has a really rosy future.
“High density is one of the most volatile areas of new housing but is also the least amount of value per unit. Most dollar value is found in detached housing, but, if anything, that is boringly steady.
“Then you’ve got the 10 million existing homes but the fact people don’t necessarily want to live in 60-year-old houses anymore. So what does that mean for construction? Over the long cycle and looking forward five to 10 years, the prospects are pretty strong.”
Mr Gillam, who chairs one of the country’s biggest building materials companies, said there was a lot “going on at the moment that should make Australians optimistic about the future”. He cited figures showing the number of hours worked by Australians was rising, which meant more disposable income, as proof the economic outlook was positive.
EnergyAustralia managing director and Reserve Bank of Australia board member Catherine Tanna said a softening in house prices would be welcome to improve affordability, but a rise in part-time jobs across the economy should not be seen as negative. “There needs to be more optimism and positivity about those numbers so there will be more confidence.”
She said she was optimistic about Australia’s economic future given relatively strong growth rates compared with other countries and a low unemployment rate. She said there had been a “demonisation” of business and it would take time to restore the reputation of, and confidence in, the corporate sector.
Jeanne Johns, chief executive of Incitec Pivot, said business had to listen to those aggrieved with it “with a lot more humility”.
“You may or may not agree with all of it, but perception was just as important as reality.
“You need to be as pragmatic as possible to deal with the issues and not get caught up in ideology,” Ms Johns said.
But Mr Gillam said the “trust deficit” was significant and real and “lessened the voice and gravitas of anything we (in business) are doing” and revelations at the banking royal commission had damaged business, which could be doomed to be “untrusted” unless it changed its approach to customers. “I don’t think business can expect to be heard until it addresses the issue of trust.”
Catherine Tanna, Jeanne Johns and John Gillam at the Outlook Conference in Melbourne yesterday