"Bigger Australia Certain"

A report by the Centre for Independent Studies examined 36 different scenarios and found that the population of Australia would increase under all of them except when migration was cancelled, births forbidden, and people not allowed to grow older. Not a surprising conclusion. Did their scenarios not include plague, nuclear war, of armageddon?
The report concludes that "even if" migration were cut in half, to 70,000 a year, the population will still reach 29,000,000 by 2050. The study seems to say "well, that's it mate, just put up with overcrowding."
But my take on that report is that it seems to make cutting migration an absolute imperative! If home grown population increase is so huge, and our infrastructure so stretched, then why are we considering letting anyone else in from outside?
There's an interesting article in the Economist reporting that the number of people in each household in America is increasing, as the economy encourages families to stay together longer. In Sydney, with its high house prices and the large houses that we are building, this trend is likely to happen here, so fewer houses would be needed to house whatever population we end up with.

Trust needs to speak out now

An interesting letter in the Northern District Times, by Lesley Goldberg, commented on the failure of the Beecroft Cheltenham Civic Trust to speak out actively in defence of the Beecroft Shopping Village, against the Hornsby Shire Council and NSW government plan to rezone it for five story mixed development. Richard Talbot, who resigned from the Trust in protest, described the BCCT committee as a "council cheer squad".

Domestic Solar Installations Cost Blowout

If you want to install solar panels and take advantage of the NSW government's Clean Energy enterprise, you probably need to hurry. It looks like it's going the way of the home insulation scheme! Another great Green Plan but equally ill-administered and financially unviable.

The domestic solar scheme allows households to install panels on their roofs then sell electricity from those roof panels back to the state at a very attractive price, then draw back coal-fired mains electricity at a third of that price! Apparently the scheme is one of the most generous in the world. The trick is that the system is funded by the power generator utilities, not by the state, which means that other uses of electricity will find their bills going up to pay for it

According to the Daily Telegraph new solar connections are being made nine times faster than expected. One suspects that outrage from consumers when they see their bills will lead the NSW government to can this scheme too.

This smacks of the funding scheme that is planned for the M2 Upgrade, where the contractor, Transurban, will be funding the construction and recouping his costs from increased road tolls. In theory it's cash-neutral for the NSW government, like they intended the Cross City and Lane Cove Tunnel projects to be. It would be nice to see the contract for the M2 upgrade and find out what liabilities will accrue to the tax payer if things don't go as planned.

Big Drop in Home Lending

The Daily Telegraph reports that "the traditional spring surge of new home buyers has failed to materialise, raising fresh doubts over the predicted revival of Sydney's wilting property market. The number of new mortgages actually fell 0.3%, compared to 10% spring increases seen in other years.
Compared to September 2009, new mortgage sales declined by 20%.
These figures released on Monday just might have influenced the Reserve Bank in their decision to leave interest rates on hold for another month.

RBA leaves Rates on Hold

Slightly against the expectations, the RBA has left interest rates on hold this month. It remains to be seen whether the banks will follow the treasurer's directive to comply!

The apartments we had to have but nobody wants

A damning indictment of the move to high rise apartments is to be found in the Sydney Morning Herald of October 2-3, page 9. "Even free furniture is not tempting buyers."
Apparently after destroying the character of much of once-beautiful Ku-ring-gai to meet the government's insistence on provision of masses of new apartments, the only flaw in the government's plan is that many of those new apartments remain empty! The expected rush of baby boomers wanting to downsize from their empty nests to smaller premises without the hastle of a garden has just not materialised.
One commentator reports that sales have mostly been to "overseas buyers looking for investment." Such buyers mostly just want to park money in Australian real estate, and often aren't very worried if the property can't be rented. An apartment can be left empty without drawing objections from neighbours, whereas an empty house needs at least to have the garden tended. And of course putting a tenant into a small apartment invites damage and loss of value, because tenants aren't as caring as those who rent a house.
It is interesting to go back through the history of the Ku-ring-gai government-forced development. An article by Sue Wellings in The Age, 14 December 2009, predicted exactly what the SMH now reports. She wrote a well reasoned explanation of why she thought the demand just was not there for the apartments the government says we have to have.
So is that what will happen to Beecroft Shopping Village? Is Hornsby Shire going to destroy our lovely village atmosphere by building multi-storey dwellings, only to find that they can't find people to live in them?
Great policy!

Does public transport mean you don't need a car?

Greg Woodhams, NSW vice president of the Planning Institute of Australia, believes apartments in inner and middle ring suburbs don't need to have all the parking spaces usually mandated by councils, if they have good public transport available. But good public transport just means people will leave their cars at home and go to work by bus or train. It doesn't mean they won't want to have cars. People use cars to go out at night, to go shopping, and to go away for the weekends. Good public transport to work is not sufficient.
Consequently, if Greg has his way, the local streets will be jammed full of resident's cars during the day as well as at night.
Residents of Beecroft and Cheltenham are already well aware of this problem. Every day floods of cars arrive to park in Hannah Street and other streets within walking distance of the station, anywhere where parking is not restricted. Yes, Beecroft has excellent public transport, buses as well as the train, but still people need cars. The problem is that the local residents, many of them elderly, therefore need to park within the shopping village because the streets around are choked with commuter cars all day long. If Hornsby Shire Council allows the village redevelopment to go ahead without increased parking spaces to cope with the extra residents, then the village will die because locals won't be able to drive in, do their shopping, and drive home. At present the signs are that the redevelopment will significantly reduce available parking, not increase it.

Apartments without garages

Oakstand Property Group has applied to Woollahra Council to build apartments with no provision for car parking! "Let all the new residents park on the street, the locals won't mind," is their justification.
The reason is that providing car parking adds some $70,000 to the cost of the unit, and of course buyers will be delighted with the cheaper price of the apartments. The developer says the new cheaper apartments "will walk out the door." If only one could assume the buyers will walk, and not bring cars to clog the local streets!
One can only hope that Woollahra Council recognises their responsibility to the existing residents in and around the proposed new development! Parking in the area is already a nightmare, and if allowed this new scheme would have disastrous effects for many years to come. This prospective windfall for developers needs to be stamped on at once!
Residents of Beecroft and Cheltenham have already expressed grave concerns about Hornsby Shire's proposal to rezone the Beecroft Shopping Village with no obvious adequate provision for car parking. The planning documents provided showed one level of underground car parking for each new five storey mixed use block, with between three and four levels of apartments and one to two levels of shops and offices. That clearly implies shoppers will have no parking provided as part of the new developments.

M2 Upgrade Controversy Heating Up

The Transurban/RTA's ''road user cost-benefit analysis'' estimated widening the M2 would increase average vehicle speed by 40 km/h in typical stop-start conditions.

But Dr John Goldberg - a former principal scientist with the CSIRO's National Measurement Laboratory, now at the University of Sydney - recently tabled an analysis (which has been peer-reviewed) that disagrees. John predicts that widening the tollway from four lanes to six gives only a 50 per cent chance of the average traffic speed increasing by more than 10 km/h.

A spokesman for Transurban responded that the reference to 40 km/h in the company's analysis was a ''standard speed, used for all road projects assessed in NSW''. Doesn't sound like rigorous scientific methodology!

Doubts about National Broadband Network

Carlos Slim, who became the richest man in the world by monopolising Mexico's phone market, has savaged the Labour government's proposal to spend $43 billion on a national broadband network (NBN). He isn't knocking the need for a high speed national network, but questions the cost, and the viability of adopting today's technology at a time when technology is advancing so fast. He believes any network should, for instance, include a good WiFi element.
Another issue that is being talked about but not clarified is whether the quoted price for the NBN is a total price, including remediation work to streets and property after the installers have done their work.

Migration dropping, babies booming.

Bureau of Statistics figures show annual population growth has slowed from 2.2% to 1.8%. Over the year to March, 241,400 people migrated to Australia, compared to 320,300 in the same period last year. However in the same period a record 303,500 babies were born in Australia, up 3.1% over last year. and the number of deaths falling. Overall the annual growth in population remains well above the long term average, concentrated in WA (2.3%) and Queensland (2.2%) with NSW expanding by just 1.6%.
An economist at CommSec, Savanth Sebastian, commented on how this will affect Australia. "More people means greater demand for houses, roads, schools, hospitals, and a raft of retail goods." More challenges for Kristina!

Public Delighted by Barangaroo?

Developers of the Barangaroo project say the public is delighted by the plan. But really, could anyone want this??

Opposition to the Barangaroo Lend Lease proposal

Reading the newsletter of the Barangaroo Action Group, I found a number of excellent arguments against the proposal, including this one:

1 - A single developer undertaking the whole development results in lack of competition and places in the hands of one corporate entity the timeframes for the construction, which will be dictated by that one entity’s commercial interests. As such, residents and city workers will be living in a construction site for up to 15 to 20 years, while an unacceptable high density development spreads over the whole site, much as Lend Lease’s Jacksons Landing project has done.

The same argument could be used against the proposed commercial upgrade of the M2. If Transurban is allowed to manage this $550M project, what guarantees will the NSW government have, and what penalties will be available, to enforce timescales and standards?

Regarding the proposed huge hotel in Barangaroo, Lend Lease promise that it will remain a hotel, but such promises are seldom kept - like the divided carriageway of the M2 over Clilworth Reserve, which Transurban now intends to fill in as part of the widening project. A number of news articles have implied that Lend Lease anticipates the hotel failing when they will seek approval to convert the building into prime appartments, making another obscene profit.

Selling the family silver

This interesting letter was in the Sun Herald:

Dear Sir

Another community-owned icon is about to bite the dust. Queensland Rail National is to be sold-off; Commonwealth Bank, Qantas, State Bank, GIO, NRMA Insurance - we once owned them all & they were substantial publicly-owned assets performing a vital honest broker role for our community.
No doubt our electricity & water infrastructure, schools & hospitals will one by one come under attack from the same lobbyists & corporate opportunists who make mega bucks out of spruiking such deals.
These community assets have been built up over generations of Australians who have fought wars to protect our way of life & they'd be rolling in their graves to see what's become of such icons.
Selling out Australia's future for a few silver coins is not in Australia's best interests.

Yours sincerely

Richard Talbot

House Price Statistics

An interesting article in the Northern District Times explains the differences between figures used by people predicting a house price crash, and those expecting stability and even continuing growth.
Jeremy Grantham, a US investment banker, says Australian property is a time bomb, alleging the house price ratio compared to disposable income is 7.5 times, around double what it should be.
Rismark disputes this, blaming foreign hedge funds for shorting Australian bank shares in anticipation of a housing bubble bursting. Rismark calculates the house price ratio as 4.6, by using all properties in Australia, not just the cities. Of course, this really reflects the fact that most people don't want to live in rural areas despite cheap housing.
The deputy governor of the Reserve Bank, Ric Battellino, supported Rismark's view, agreeing that city house prices are "quite elevated" but if you look across the whole country prices are not that different to thos in other countries. He says that house prices in Australian cities are not high relative to the incomes in the cities.

Owner-builder Training Changes

People in NSW wanting to build or renovate their own house will from next month have to undertake a course taking at least a week and costing $800 or more. The course includes a 700 page manual. At present about 1000 permits are awarded each month, after an online training course taking four hours. The number of people taking the new course is probably going to be significantly less!

M2 Widening Benefits Challenged

John Goldberg, a former principal scientist at the CSIRO and now at University of Sydney has questioned the validity of statistics used to justify the $550M project to widen the M2 through Beecroft and Cheltenham.
Mr Goldberg told the Sydney Morning Herald that he had studied all the traffic densities and the corresponding speeds and concludes that it would be a break-even proposition to get more than 10 km/h increase in average speeds. Transurban have claimed a 40 km/h increase, an estimate that Mr Goldberg says is "wildly out".
He also challenges their estimates for cost-benefit ratios for travel times, accidents, and vehicle operating costs. The company's analysis concluded "the project is economically worthwhile with benefits for the community being estimated to be 3.4 times greater than the costs." Mr Goldberg has reached very different conclusions. He believes the benefits will be only 0.27 times the cost, far below the threshold required for major road projects under the state's environmental laws.
Of course the NSW government and RTA are probably not unduly perturbed about the cost benefit of the project, because Transurban will be funding the work themselves and recovering the cost by increased tolls on road users, a rather neat way of new indirect taxation.
Meanwhile the residents of Beecroft and Cheltenham stand to have two years of massive construction work, and lose much of the delights of the Chilworth Reserve when the present quite tasteful two flyovers are replaced with a ten lane monster highway.

Housing Sales Up

According to Alison Bell of the Daily Telegraph, home and mortgage sales jumped 11% in August as homebuyer confidence strenghened and mortgage delinquencies stabilised.
As expected, the Reserve Bank kept interest rates steady this month. However banks are incurring extra costs borrowing money from abroad so individual bank mortgage rates might rise anyway.

Levels of Household Debt

There's an interesting article by Jonathan Chancellor about how the level of household debt in Australia has risen from 50% of household disposable income in 1980 to 150% now. One wonders to what extent this is just a shift in our outlook on life, with people now comfortable to borrow freely.
A good sign is that the number of repossession actions lodged in the NSW Supreme Court is well down on the last few years.
Deutsche Bank feels that concerns about Australian house prices are ebbing, suggesting a steady moderation in price pressures.

"Prices up, vendors selling at a loss"

That eye-catching headline is from today's Sydney Morning Herald. The article by Jonathan Chancellor gives examples of recent sales where properties have gone for well below the earlier purchase price. One such property sold for $1.25M after being bought in 2007 for $1,635,500, a 23% price fall over the last three years. The successful selling agent explains that this was because the original purchaser overpaid when he bought it. I wonder how many recent first-home-buyers are wondering about their futures.

From the same edition of the SMH, this article by Simon Johanson discusses the nature of growing Sydney house prices under the headline "Property apocalyptics predict bubble trouble", and talks around the prospect for a collapse. Simon makes the point I mentioned in my last blog, that "no one wants a sharp plunge in house prices". Any politician putting forward plans deliberately to drive prices down could find very few supporters. But then, nobody wanted the collapse that hit America two years ago.