1 00:00:05,790 --> 00:00:08,160 Sean Aylmer: Welcome to the Fear and Greed Business Interview. I'm Sean 2 00:00:08,400 --> 00:00:12,029 Sean Aylmer: Aylmer. Australia has some of the world's least densely populated 3 00:00:12,030 --> 00:00:15,330 Sean Aylmer: cities and some of the highest home prices as well. 4 00:00:15,599 --> 00:00:18,389 Sean Aylmer: But new research by Domain shows a shift in housing 5 00:00:18,420 --> 00:00:22,050 Sean Aylmer: dynamics with land sizes decreasing. But even though the price of 6 00:00:22,110 --> 00:00:25,829 Sean Aylmer: that land is increasing, the rise in density is creating 7 00:00:25,829 --> 00:00:28,980 Sean Aylmer: a greater opportunity for homeownership and may just offer a 8 00:00:28,980 --> 00:00:32,880 Sean Aylmer: solution to the housing affordability crisis. Did you understand what 9 00:00:32,880 --> 00:00:34,769 Sean Aylmer: I just said? I'm not sure I did. Who do 10 00:00:34,769 --> 00:00:37,800 Sean Aylmer: we need? We need Nicola Powell. Dr. Nicola Powell, Domain's chief 11 00:00:37,800 --> 00:00:40,140 Sean Aylmer: of research and economics to help us out. Nicola, welcome 12 00:00:40,140 --> 00:00:41,010 Sean Aylmer: back to Fear and Greed. 13 00:00:41,490 --> 00:00:42,390 Dr. Nicola Powell: Thanks for having me. 14 00:00:42,990 --> 00:00:46,110 Sean Aylmer: So before we get to the future, what needs to 15 00:00:46,110 --> 00:00:48,929 Sean Aylmer: happen with density? Take me through some of the background 16 00:00:48,929 --> 00:00:51,928 Sean Aylmer: to this and why Australia is as it is and 17 00:00:51,929 --> 00:00:53,040 Sean Aylmer: what we're talking about. 18 00:00:53,730 --> 00:00:56,400 Dr. Nicola Powell: So we had a look at price per square meter. So 19 00:00:56,400 --> 00:00:59,640 Dr. Nicola Powell: it's a different way to slice price data, but what 20 00:00:59,640 --> 00:01:02,310 Dr. Nicola Powell: it allows us to do is actually look at the land size that 21 00:01:02,940 --> 00:01:05,759 Dr. Nicola Powell: is being purchased as well as the actual sold price. 22 00:01:06,059 --> 00:01:08,669 Dr. Nicola Powell: And obviously that gives you great insight into the differing 23 00:01:08,670 --> 00:01:12,270 Dr. Nicola Powell: land parcels, not only across our different capital cities, but within 24 00:01:12,719 --> 00:01:15,899 Dr. Nicola Powell: the capital cities, but also how much they are per 25 00:01:15,900 --> 00:01:19,440 Dr. Nicola Powell: square meter. So it gives you something that is easy 26 00:01:19,440 --> 00:01:22,950 Dr. Nicola Powell: to compare across different capital cities and within capital cities 27 00:01:22,950 --> 00:01:23,369 Dr. Nicola Powell: as well. 28 00:01:23,940 --> 00:01:27,869 Sean Aylmer: Okay. And so capital cities presumably are a lot more 29 00:01:28,139 --> 00:01:31,410 Sean Aylmer: dense for want of a better word than rural Australia, 30 00:01:31,410 --> 00:01:34,709 Sean Aylmer: I'm presuming, and then the inner cities are even more 31 00:01:34,709 --> 00:01:36,509 Sean Aylmer: dense than the outer cities, is that right? 32 00:01:37,319 --> 00:01:41,550 Dr. Nicola Powell: So what was very evident at a suburb level is 33 00:01:41,610 --> 00:01:45,750 Dr. Nicola Powell: that the higher price per square meter is found within 34 00:01:45,750 --> 00:01:49,529 Dr. Nicola Powell: inner city locations, and it's actually found within suburbs that 35 00:01:49,530 --> 00:01:52,470 Dr. Nicola Powell: have what we call kind of medium density. So lots 36 00:01:52,470 --> 00:01:55,980 Dr. Nicola Powell: of terraced homes and town houses. So as an example, 37 00:01:55,980 --> 00:01:58,409 Dr. Nicola Powell: and this is quite an eye watering figure in terms 38 00:01:58,410 --> 00:02:02,039 Dr. Nicola Powell: of price per square meter, the most expensive suburb per 39 00:02:02,040 --> 00:02:05,459 Dr. Nicola Powell: square meter for houses is actually Paddington in Sydney. So 40 00:02:06,270 --> 00:02:12,210 Dr. Nicola Powell: just over $ 27,000 per square meter. All of the areas in 41 00:02:12,210 --> 00:02:15,000 Dr. Nicola Powell: the top 20 are actually in Sydney, and it showcases 42 00:02:15,000 --> 00:02:17,610 Dr. Nicola Powell: the real premium that is being paid for Sydney and 43 00:02:17,610 --> 00:02:21,508 Dr. Nicola Powell: the premium for land in Sydney. Outside of Sydney, Albert 44 00:02:21,508 --> 00:02:25,110 Dr. Nicola Powell: Park in Melbourne comes in at number 23, which is 45 00:02:25,110 --> 00:02:29,430 Dr. Nicola Powell: almost at $15, 000 per square meter. But what was interesting 46 00:02:29,430 --> 00:02:33,870 Dr. Nicola Powell: is the widening gap of affordability in Sydney compared to 47 00:02:33,870 --> 00:02:38,669 Dr. Nicola Powell: the other capital cities has increased over time, which I 48 00:02:38,669 --> 00:02:43,200 Dr. Nicola Powell: think really showcases the premium for the Sydney housing market. 49 00:02:43,200 --> 00:02:45,060 Dr. Nicola Powell: And I think even when you look at the geography 50 00:02:45,060 --> 00:02:47,669 Dr. Nicola Powell: of Sydney, I think Sydney is an interesting test case 51 00:02:47,669 --> 00:02:50,730 Dr. Nicola Powell: where it's really contained in terms of where it can 52 00:02:50,730 --> 00:02:53,250 Dr. Nicola Powell: sprawl. It's got Blue Mountains, it's got the ocean the 53 00:02:53,250 --> 00:02:56,608 Dr. Nicola Powell: other side, it's surrounded by national parks as well, whereas 54 00:02:56,610 --> 00:02:59,070 Dr. Nicola Powell: if you compare it to Melbourne, Melbourne actually has almost 55 00:02:59,070 --> 00:03:01,649 Dr. Nicola Powell: that seemingly endless stability to sprawl. 56 00:03:02,730 --> 00:03:06,150 Sean Aylmer: So is the answer then, if I'm following you, if 57 00:03:06,150 --> 00:03:09,690 Sean Aylmer: we had a much denser city, would that relieve some 58 00:03:09,690 --> 00:03:10,260 Sean Aylmer: of the pressure? 59 00:03:11,099 --> 00:03:14,460 Dr. Nicola Powell: So what this report actually found is how send unit 60 00:03:14,460 --> 00:03:17,548 Dr. Nicola Powell: prices per square meter across most of our capital cities 61 00:03:17,699 --> 00:03:21,060 Dr. Nicola Powell: are trending upwards. Pretty much all of them are higher year- on- 62 00:03:21,060 --> 00:03:24,419 Dr. Nicola Powell: year apart from some of the smaller capital cities. And 63 00:03:24,419 --> 00:03:27,750 Dr. Nicola Powell: they're all up over the past five years. Now, we took 64 00:03:27,750 --> 00:03:30,448 Dr. Nicola Powell: a much longer term lens as well, and we looked 65 00:03:30,508 --> 00:03:32,940 Dr. Nicola Powell: 20 years ago, what was the price per square meter 66 00:03:32,969 --> 00:03:35,909 Dr. Nicola Powell: 20 years ago? What was the land size 20 years 67 00:03:35,910 --> 00:03:40,260 Dr. Nicola Powell: ago? What we've generally found is that land sizes are 68 00:03:40,260 --> 00:03:43,170 Dr. Nicola Powell: shrinking over time, and that has been a trend over 69 00:03:43,170 --> 00:03:45,839 Dr. Nicola Powell: the last 20 years. And what we did is we 70 00:03:45,840 --> 00:03:48,809 Dr. Nicola Powell: actually looked at price per square meter today if we 71 00:03:48,809 --> 00:03:51,570 Dr. Nicola Powell: had land size that was the same as what it 72 00:03:51,570 --> 00:03:54,960 Dr. Nicola Powell: was 20 years ago. And this is where it becomes 73 00:03:55,260 --> 00:03:58,830 Dr. Nicola Powell: quite startling, I would say, in terms of the difference. 74 00:03:59,220 --> 00:04:03,510 Dr. Nicola Powell: So Perth saw the biggest difference. So if Perth land 75 00:04:03,510 --> 00:04:06,690 Dr. Nicola Powell: sizes today were the same as they were 20 years 76 00:04:06,690 --> 00:04:11,549 Dr. Nicola Powell: ago, house prices overall in Perth would be $ 300,000 higher. 77 00:04:12,269 --> 00:04:14,970 Dr. Nicola Powell: And we've got to remember that Perth is affordable, it's deemed 78 00:04:14,970 --> 00:04:17,849 Dr. Nicola Powell: as that more affordable capital city. And Perth is one 79 00:04:17,850 --> 00:04:21,990 Dr. Nicola Powell: of those cities that has seen a more rapid shrinkage 80 00:04:22,080 --> 00:04:25,439 Dr. Nicola Powell: of land size over the last 20 years. And that 81 00:04:25,440 --> 00:04:28,890 Dr. Nicola Powell: shrinkage in land size has actually helped to contain the 82 00:04:28,949 --> 00:04:33,930 Dr. Nicola Powell: overall price that we're paying, because you may feel like 83 00:04:33,930 --> 00:04:35,820 Dr. Nicola Powell: you're paying more but you're getting less, but you are 84 00:04:35,820 --> 00:04:39,750 Dr. Nicola Powell: actually buying less square meters of land. And that is the 85 00:04:39,750 --> 00:04:44,310 Dr. Nicola Powell: factor that is helping to keep overall prices being paid 86 00:04:44,400 --> 00:04:49,230 Dr. Nicola Powell: down $ 300,000 lower in Perth if we hadn't have seen 87 00:04:49,860 --> 00:04:50,789 Dr. Nicola Powell: block sizes shrink. 88 00:04:51,660 --> 00:04:54,690 Sean Aylmer: So the white picket fence, the Hills Hoist in the backyard, 89 00:04:55,050 --> 00:04:59,370 Sean Aylmer: that kind of dream of the '70s, '80s, '90s in Australia, not 90 00:04:59,370 --> 00:05:02,160 Sean Aylmer: sure whether it's still there now. But the point being, 91 00:05:02,160 --> 00:05:05,519 Sean Aylmer: if you can, we as Australians, can drop that idea 92 00:05:06,270 --> 00:05:09,120 Sean Aylmer: and adopt greater density, there's going to be more opportunities 93 00:05:09,120 --> 00:05:09,870 Sean Aylmer: for homeownership. 94 00:05:10,290 --> 00:05:14,460 Dr. Nicola Powell: Absolutely. I do think that we do need to reimagine, 95 00:05:14,460 --> 00:05:16,529 Dr. Nicola Powell: and I think it's really important that we all talk 96 00:05:16,529 --> 00:05:19,830 Dr. Nicola Powell: about the Australian dream in a different way. The Australian 97 00:05:19,830 --> 00:05:23,820 Dr. Nicola Powell: dream of our grandparents would've been the Hills Hoist and the 98 00:05:23,820 --> 00:05:27,480 Dr. Nicola Powell: quarter acre block. That is really hard to achieve today. 99 00:05:27,720 --> 00:05:30,750 Dr. Nicola Powell: And I think that what we need to do is 100 00:05:30,750 --> 00:05:34,139 Dr. Nicola Powell: talk about what that Australian dream is. It certainly is 101 00:05:34,139 --> 00:05:37,080 Dr. Nicola Powell: about owning a home, but that owning a home might 102 00:05:37,080 --> 00:05:39,238 Dr. Nicola Powell: not be that quarter acre block. It might be a 103 00:05:39,240 --> 00:05:42,210 Dr. Nicola Powell: terrace or a townhouse, it might be a dual occupancy, 104 00:05:42,360 --> 00:05:44,880 Dr. Nicola Powell: it might even be a unit or an apartment. But 105 00:05:44,880 --> 00:05:47,609 Dr. Nicola Powell: I think it's really important that we have those discussions and make sure... 106 00:05:48,000 --> 00:05:50,729 Dr. Nicola Powell: I've got young children and I think about what is 107 00:05:50,730 --> 00:05:52,889 Dr. Nicola Powell: their first home going to actually look like? What is 108 00:05:52,889 --> 00:05:55,200 Dr. Nicola Powell: their Australian dream going to look like? And it's going 109 00:05:55,200 --> 00:05:58,049 Dr. Nicola Powell: to be different to what my Australian dream was. 110 00:05:58,799 --> 00:06:00,720 Sean Aylmer: Stay with me, Nicola. We'll be back in a minute. 111 00:06:08,160 --> 00:06:10,678 Sean Aylmer: My guest this morning is Dr. Nicola Powell, chief of 112 00:06:10,678 --> 00:06:14,700 Sean Aylmer: research and economics at Domain. What needs to change here? 113 00:06:14,700 --> 00:06:19,080 Sean Aylmer: So we as individuals probably need to rethink what our 114 00:06:19,260 --> 00:06:22,890 Sean Aylmer: Australian dream is, but what about the politics of it and 115 00:06:22,890 --> 00:06:25,320 Sean Aylmer: policy? Does that need to change? 116 00:06:26,099 --> 00:06:28,109 Dr. Nicola Powell: Look, I think so, and I think we've got glimmers 117 00:06:28,110 --> 00:06:31,649 Dr. Nicola Powell: of that occurring. The (inaudible) government has increased, basically 118 00:06:31,650 --> 00:06:36,239 Dr. Nicola Powell: upsized and increased density around certain infrastructure hubs. And what 119 00:06:36,240 --> 00:06:38,760 Dr. Nicola Powell: that does is increase the number of dwellings on the 120 00:06:38,760 --> 00:06:42,960 Dr. Nicola Powell: same footprint of land. And that is described as efficient 121 00:06:43,020 --> 00:06:46,980 Dr. Nicola Powell: land use. And I think that that's what we need to be focused 122 00:06:46,980 --> 00:06:49,349 Dr. Nicola Powell: on is we do have some of the least dense 123 00:06:49,349 --> 00:06:51,779 Dr. Nicola Powell: cities in the world. We have some of the highest 124 00:06:51,779 --> 00:06:54,690 Dr. Nicola Powell: property markets in the world and there is a relationship 125 00:06:54,690 --> 00:06:58,530 Dr. Nicola Powell: between those two things. And I think if we promote 126 00:06:58,860 --> 00:07:01,680 Dr. Nicola Powell: a more efficient use of land, and that is through 127 00:07:01,680 --> 00:07:05,040 Dr. Nicola Powell: higher density, and I think the discussion around higher density 128 00:07:05,160 --> 00:07:09,419 Dr. Nicola Powell: can be fearmongering, I think amongst some Australians. There is 129 00:07:09,420 --> 00:07:11,490 Dr. Nicola Powell: this fear that it will change the landscape of a 130 00:07:11,490 --> 00:07:14,250 Dr. Nicola Powell: suburb, but we've got to remember that higher density doesn't 131 00:07:14,250 --> 00:07:18,390 Dr. Nicola Powell: mean just apartments and units. It means a broad spectrum 132 00:07:18,390 --> 00:07:21,150 Dr. Nicola Powell: of housing to ensure that we are meeting the needs 133 00:07:21,150 --> 00:07:24,300 Dr. Nicola Powell: of Australians and that is providing shelter and that is 134 00:07:24,300 --> 00:07:29,640 Dr. Nicola Powell: providing affordable and accessible homeownership. It's things like terraced houses, 135 00:07:29,789 --> 00:07:33,630 Dr. Nicola Powell: it's townhomes, it's dual occupancies, it's smaller blocks of land 136 00:07:33,630 --> 00:07:36,810 Dr. Nicola Powell: as well for detached houses. And I think that is 137 00:07:36,810 --> 00:07:40,259 Dr. Nicola Powell: poles apart from what that quarter acre dream, Australian dream 138 00:07:40,260 --> 00:07:41,190 Dr. Nicola Powell: originally was. 139 00:07:41,880 --> 00:07:44,340 Sean Aylmer: How do you think older Australians will take this? So 140 00:07:45,059 --> 00:07:46,949 Sean Aylmer: I'm going to put myself in this category, Nicola. I 141 00:07:46,949 --> 00:07:49,440 Sean Aylmer: have a house and it's not quite a quarter acre 142 00:07:49,440 --> 00:07:51,090 Sean Aylmer: block, but it's in the suburbs and it's a nice 143 00:07:51,090 --> 00:07:55,950 Sean Aylmer: place. And the idea of going higher density around my 144 00:07:55,950 --> 00:07:58,560 Sean Aylmer: area, I'm a bit of a NIMBY in this one, 145 00:07:59,610 --> 00:08:02,130 Sean Aylmer: but how do I get people like me to change 146 00:08:02,130 --> 00:08:02,700 Sean Aylmer: my attitude? 147 00:08:03,480 --> 00:08:07,350 Dr. Nicola Powell: It's really interesting, because I actually have the same discussion with my mother- in- 148 00:08:07,350 --> 00:08:12,780 Dr. Nicola Powell: Law. I hope she doesn't listen to this around this 149 00:08:12,780 --> 00:08:16,260 Dr. Nicola Powell: whole concept of people, we all worry about our own 150 00:08:16,260 --> 00:08:19,619 Dr. Nicola Powell: children purchasing a home and affordability, but we don't want 151 00:08:19,620 --> 00:08:21,749 Dr. Nicola Powell: it to occur in our own backyard. Well, then where 152 00:08:21,750 --> 00:08:24,540 Dr. Nicola Powell: is it going to occur? We've got to be forward- 153 00:08:24,540 --> 00:08:27,540 Dr. Nicola Powell: thinking here. We've got to think off the future and 154 00:08:27,540 --> 00:08:29,370 Dr. Nicola Powell: we need to be really visionary. We need to be 155 00:08:29,550 --> 00:08:33,509 Dr. Nicola Powell: planning for Australia in 10, 20 years time and not building 156 00:08:33,510 --> 00:08:35,520 Dr. Nicola Powell: the suburbs to suit the needs of people that live 157 00:08:35,520 --> 00:08:36,150 Dr. Nicola Powell: in them today. 158 00:08:36,750 --> 00:08:38,789 Sean Aylmer: So how do buyers use this data on price per 159 00:08:38,790 --> 00:08:40,799 Sean Aylmer: square meter? What should they be looking for? 160 00:08:41,309 --> 00:08:43,559 Dr. Nicola Powell: Look, I think this is an interesting one, because I 161 00:08:43,559 --> 00:08:45,540 Dr. Nicola Powell: think price per square meter is certainly a different way 162 00:08:45,540 --> 00:08:47,910 Dr. Nicola Powell: to look at the pricing data. I think what it 163 00:08:47,910 --> 00:08:50,940 Dr. Nicola Powell: can help to do is actually identify those areas that 164 00:08:50,940 --> 00:08:53,280 Dr. Nicola Powell: are perhaps bridesmaid. It allows you to do that direct 165 00:08:53,280 --> 00:08:57,088 Dr. Nicola Powell: comparison. And by bridesmaids, this is an area that perhaps 166 00:08:57,089 --> 00:09:01,020 Dr. Nicola Powell: hasn't gentrified, it's slightly cheaper than neighboring locations. And we 167 00:09:01,020 --> 00:09:03,870 Dr. Nicola Powell: know that gentrification takes a while to kind of wave 168 00:09:03,870 --> 00:09:07,860 Dr. Nicola Powell: through different areas and that's actually what higher prices do. 169 00:09:07,890 --> 00:09:11,280 Dr. Nicola Powell: You get higher prices, it locks people out, so they 170 00:09:11,280 --> 00:09:15,449 Dr. Nicola Powell: have to look further afield. So I think the identification 171 00:09:15,870 --> 00:09:19,319 Dr. Nicola Powell: of those areas that are accessible, those areas that are 172 00:09:19,320 --> 00:09:22,650 Dr. Nicola Powell: perhaps gentrifying and have a lower price per square meter 173 00:09:22,650 --> 00:09:24,240 Dr. Nicola Powell: compared to other locations. 174 00:09:24,809 --> 00:09:27,480 Sean Aylmer: Okay. So have you got some examples of suburbs in 175 00:09:27,480 --> 00:09:31,139 Sean Aylmer: the major cities where you're probably getting better value for 176 00:09:31,139 --> 00:09:32,699 Sean Aylmer: money on this measure? 177 00:09:33,599 --> 00:09:37,439 Dr. Nicola Powell: So we set that threshold of 20Ks from the CBDs. It 178 00:09:37,440 --> 00:09:39,210 Dr. Nicola Powell: had to be within 20Ks and what was the most 179 00:09:39,210 --> 00:09:42,390 Dr. Nicola Powell: affordable area. It does look different depending upon the city. 180 00:09:42,390 --> 00:09:46,110 Dr. Nicola Powell: We've got some well under $ 1000 per square meter. Sydney 181 00:09:46,110 --> 00:09:49,620 Dr. Nicola Powell: is up there. South Granville was the most affordable within 182 00:09:49,620 --> 00:09:55,110 Dr. Nicola Powell: a 20K distance at almost $1, 900 per square meter. But 183 00:09:55,110 --> 00:10:01,650 Dr. Nicola Powell: other areas, so if we go to Melbourne, Kalaroo, $ 850 184 00:10:01,650 --> 00:10:05,279 Dr. Nicola Powell: per square meter, average block size there, or medium block 185 00:10:05,280 --> 00:10:08,669 Dr. Nicola Powell: size there I should say, is 600 square meters. Aldgate 186 00:10:08,730 --> 00:10:15,150 Dr. Nicola Powell: in Adelaide, $ 552 per square meter. Gooseberry Hill out in 187 00:10:15,150 --> 00:10:20,880 Dr. Nicola Powell: Perth, $ 449 per square meter. And can't forget Canberra, Fraser. 188 00:10:21,480 --> 00:10:26,340 Dr. Nicola Powell: Large block sizes is in Fraser actually. Median is 1, 140 189 00:10:26,340 --> 00:10:30,449 Dr. Nicola Powell: square meters and the cost of that is $ 851 per 190 00:10:30,449 --> 00:10:30,660 Dr. Nicola Powell: square meter. 191 00:10:30,660 --> 00:10:34,080 Sean Aylmer: Okay. So I mean, the wrap up of this, and 192 00:10:34,080 --> 00:10:37,440 Sean Aylmer: it's just a very interesting way on looking at land 193 00:10:37,440 --> 00:10:40,529 Sean Aylmer: size and it probably gives us an insight into policy 194 00:10:40,679 --> 00:10:43,139 Sean Aylmer: going forward. Well, hopefully it gives us an insight into 195 00:10:43,139 --> 00:10:44,550 Sean Aylmer: the right policy going forward. 196 00:10:45,089 --> 00:10:46,919 Dr. Nicola Powell: I think so. I think you always need the data 197 00:10:46,920 --> 00:10:49,949 Dr. Nicola Powell: points to kind of back up the direction of where 198 00:10:50,100 --> 00:10:52,980 Dr. Nicola Powell: a housing policy does go. And I do think particularly 199 00:10:52,980 --> 00:10:56,578 Dr. Nicola Powell: the shrinking block size and that proof point in, if 200 00:10:57,030 --> 00:10:59,400 Dr. Nicola Powell: land size has stayed the same over the last 20 201 00:10:59,400 --> 00:11:02,130 Dr. Nicola Powell: years, just how much higher house prices actually would be. 202 00:11:02,910 --> 00:11:04,680 Sean Aylmer: Nicola, thank you for talking to Fear and Greed. 203 00:11:04,980 --> 00:11:05,580 Dr. Nicola Powell: Thank you. 204 00:11:05,969 --> 00:11:09,240 Sean Aylmer: That was Dr. Nicola Powell, Domains chief of research and 205 00:11:09,270 --> 00:11:12,059 Sean Aylmer: economics. This is the Fear and Greed daily interview. Join 206 00:11:12,059 --> 00:11:14,070 Sean Aylmer: us every morning for the full episode of Fear and 207 00:11:14,070 --> 00:11:16,738 Sean Aylmer: Greed, daily business news for people who make their own 208 00:11:16,740 --> 00:11:19,230 Sean Aylmer: decisions. I'm Sean Aylmer. Enjoy your day.