Sydney lifestyle undergoes revamp as home prices rise
THE AUSTRALIAN DREAM, WHICH EQUATES PROSPERITY WITH LAND OWNERSHIP, IS CHANGING
A fter spending half their lives in Sydney in a four-bedroom suburban house, the Dunkerleys are selling the family home to a developer, who plans to build 141 apartments on the site.
“We’re very happy with the price,” said Chris Dunkerley, 64, a retiree who joined forces with seven neighbours to negotiate the best price for the houses slated for demolition and stand to get as much as A$3.8 million (Dh10.9 million) each.
The Dunkerleys’ changing fortunes stem from plans by the New South Wales state government to allow developers to build apartments on sites now occupied by detached homes. It’s seeking to reverse a slowdown in homebuilding in Sydney since 2001 and curb spiralling home prices.
“The great Australian dream of owning your own home is still very much alive, but it’s changing,” said Kim Hawtrey, associate director of the market research firm BIS Shrapnel. The great Australian dream equates prosperity and freedom with land ownership.
Inconsistent growth
Sydney added 72,000 dwellings from 2006 to 2011, from 110,000 between 1996 and 2001, according to population analysis firm ID Consultancy. That has not been the case across Australia, though.
Melbourne, the nation’s second-most populous city, added 144,000 homes between 2006 and 2011 from 110,000 between 1996 to 2001. Home building has been so strong it’s sparking concerns of an oversupply.
Sydney’s population grew by about 63,000 in the year ended June 30, 2012, compared with dwelling approvals of about 25,000, according to the report.
As building has failed to keep pace, values have surged, putting new homes out of the reach of many young buyers. Sydney’s dwelling prices jumped 28 per cent over the past two years, and 33 per cent in the past three years, according to property information provider CoreLogic.
The Reserve Bank of Australia reduced its benchmark rate by 25 basis points to a record low 2.25 per cent this month to counter sharp declines in commodity prices and a strong currency. That led banks to cut home loan costs, potentially adding “some fuel to what are already strong housing market conditions,” CoreLogic said on February 3.
More than two-thirds of Australians live in Sydney, Melbourne, and six other state and territory capitals.
The Liberal-National coalition, which ousted the Labor party in the New South Wales elections of 2011, vowed to address the underbuilding, embarking on a plan to help create new homes and jobs. Since then, the pace of construction has picked up. Dwelling approvals rose 7 per cent across Sydney in 2014 from the previous year, statistics bureau data show.
In Australia, local councils and the state government are responsible for planning and approving new housing supply.
Sydney’s population will rise by 1.6 million over the next 20 years, from about 4.4 million today, requiring 664,000 new homes, according to government plans for the city.
The state hasn’t quantified how far the rezonings will go toward meeting that need, and supply is subject to further planning, Lachlan McKenzie, a spokesman for the state Department of Planning and Environment, said. Councils must approve projects even in rezoned areas.
Going up
Building up instead of out is “increasingly meeting a need on the demand side, as apartments are more affordable for young people who often want to live closer to major work hubs,” Hawtrey said.
More apartments doesn’t always mean better affordability, Cameron Kusher, senior research analyst at CoreLogic, warned. Both Sydney and Melbourne are among the 10 least affordable housing markets, according to a ranking of 360 cities across nine countries by consultancy Demographia.
Despite some concerns, the shift to apartment living is inevitable, said billionaire Harry Triguboff, founder and managing director of Meriton Apartments Pty, Australia’s biggest apartment developer.
“When councils rezone property, rates go up because the value of the land goes up, and people who live in the houses will sell because they’ll get more money,” he said.
7 % Dwelling approvals rose by this rate across Sydney in 2014. 2/3 of Australians live in Sydney, Melbourne, and six other state and territory capitals.