‘Rosy fu­ture’ for medium-den­sity hous­ing

The Weekend Australian - - BUSINESS REVIEW - JOHN STENSHOLT PROP­ERTY

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.”

DAVID GERAGHTY

Cather­ine Tanna, Jeanne Johns and John Gillam at the Out­look Con­fer­ence in Mel­bourne yes­ter­day

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