avjennings.com.auavjennings.com.au
Housing Affordability
Summit 2015
Peter Summers
Managing Director & CEO
AVJennings Limited
Finding rational
reform in an
irrational debate
avjennings.com.au
2
Introduction
Housing Affordability
The issue of affordability is of critical importance
• The impact from getting it right or wrong can be significant
Personal impacts
• Purchasing a home is the most significant decision most people make
• Not just buying
• Choosing where to live is a huge decision
Social and economic impacts
avjennings.com.au
3
Introduction
Housing Affordability
The focus on affordability is timely and welcomed
• But it has been going on for some time
The gap between debate and reform
• Not just about identifying issues but outcomes
Can’t possibly expect great outcomes if not driven by genuine and informed debate
avjennings.com.au
4
Understanding the issue
Housing Affordability
Land Supply
Inclusionary Zoning & Policies
Various Tax Structures
Ownership and Renting
avjennings.com.au
5
Housing Affordability
Debate needs to start with an understanding of the issue
Is this happening?
• Apples v Oranges issue
• The role and impact of the Media
• The role and impact of Government
• Does the customer have a say?
avjennings.com.au
6
Understanding the issue - comparing apples & oranges
Housing Affordability
Finance
• Interest rates 5-6%
• Bank rules
Costs of Regulation & Innovation
• Has added a lot to the initial cost of a home but ongoing costs are lower
avjennings.com.au
7
Understanding the issue - comparing apples & oranges
Housing Affordability
The impact of a user pays system
Generational differences
•The way we live, work and play
•Why the focus on the distance to the city?
Specifications and Inclusions
•More house and furnishings included in today’s homes and projects
•Extends to other things like water tanks, underground power, etc.
avjennings.com.au
8
Media
Housing Affordability
A two edged sword
• Gets it on the agenda – particularly with government
• But the impact of style of reporting can be damaging
Consumer confidence – critical
It is important for the Media to understand cycles
Media tend to focus on one point in the cycle without providing broader context
The use of averages, over-simplification or selective sources distorts true picture
avjennings.com.au
9
Media
Housing Affordability
“So when you're devising that economic policy for the country, yes
I'm very concerned about Sydney and I think some of what's
happening is crazy, but we've got a national focus as well and that
just increases the complexity.”
- Reserve Bank Governor, Glenn Stevens
- Brisbane, Wednesday June 10, 2015
avjennings.com.au
10
Media
That was reported as ‘house prices crazy’
Housing Affordability
avjennings.com.au
11
Media
Housing Affordability
Sydney Morning Herald
October 13, 2015
Three days later…
avjennings.com.au
12
Media
Housing Affordability
Sydney Morning Herald
October 16, 2015
“You will see in Sydney and Melbourne high single
digit rates of growth as being quite plausible given
the fundamental drivers of what are pushing those
prices up.”
- Andrew Thorburn, National Australia Bank CEO
“We don’t agree with the people at the extreme who
say there’s a big bubble that’s about to burst.”
- Brian Hartzer, Westpac CEO
avjennings.com.au
13
Media
Housing Affordability
Media tend to focus on one point in
the cycle rather than take the cycle
as a whole and report where we are
in the cycle.
avjennings.com.au
14
Media
Housing Affordability
Media tend to focus on one point in
the cycle rather than take the cycle
as a whole and report where we
are in the cycle.
avjennings.com.au
15
Government
Housing Affordability
Layers
• Federal
• State
• Councils
• Where does ownership and responsibility lie?
• Do roles match ownership and responsibility and is there adequate accountability?
The cost and time of uncertainty
avjennings.com.au
16
Government
Housing Affordability
Tax
• Federal Government collects $21.48 billion in property related taxes
• State Governments are expected to collect $29.96 billion in 2015/16
• Local Government collects approximately $23.21 billion in fees and charges
The rental market
• Current government strategies
avjennings.com.au
17
Does the customer have a voice?
Housing Affordability
Shift to a user pays system
Will reform consider what buyers want?
Is affordability the main or secondary aim?
• Policies around densification can be questioned
avjennings.com.au
18
Will we get reform?
Housing Affordability
Will we get unified goals?
• Reform must be aimed at unified goals
Can the tax reform debate be won?
• Rare chance in history
Positive signs
• Words precede action and at least there’s been some encouraging discussion
• Supply rather than demand focus (understanding we have a housing shortage)
• Discussions about affordability
• Tax debate
avjennings.com.au
19
Will we get reform?
Housing Affordability
Reform won’t be achieved if dominated by self interest
• Involves people from many different sectors
• Public
• Three levels of government
• Developers
• Suppliers
• Customers (FHBs, Families, Downsizers, Investors, Renters)
avjennings.com.au
Affordability
20
1,000,616
668,030
490,855 479,285
703,000
342,633
390,412 386,417
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
1,100,000
Sydney Melbourne Brisbane Adelaide
House Prices $12 months to June 2015
Overall AVJennings
avjennings.com.auavjennings.com.au
Housing MattersCommunity Matters
Section title goes here
Presentation title goes here
Like what you see?Be part of our conversation.
informa.com.au
Join our e-newsletter