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Are we Wynne-ing yet?
[img=620x0]http://www.afr.com/content/dam/images/g/l/9/g/d/x/image.related.afrArticleLead.620x350.gl8g5u.png/1448608710737.jpg[/img]Victorian Planning Minister Richard Wynne needs to house 100,000 extra people in Melbourne every year Pat Scala
by Nick Lenaghan
A month after Malcolm Turnbull took over as prime minister with a renewed focus on the nation's cities, Victoria's planning tsar Richard Wynne unveiled a proposal to reboot Melbourne's blueprint for growth.
Mr Wynne presented the revised Plan Melbourne as more refresh than rewrite. Whatever way he tags it, the overhaul underscores deep and difficult issues in catering for urban growth.
Melbourne is the nation's fastest-growing city. Within 40 years it will overtake Sydney as the nation's largest city with a population of 8 million.
The revised Plan Melbourne requires 70 per cent of new housing to be built in established suburbs.
That's a significant step-up in the allocation made under the original plan. And it signifies the next battleground for growth after Melbourne's central business district is the city's suburbs.
Each state capital has unique challenges. However Wynne manages to direct growth has lessons for planners further north.
It is the core dilemma in planning: getting the right mix of investment and amenity. In Melbourne, regularly awarded as the world's most liveable city, that issue cuts especially sharp.
"Yes, we have to house 100,000 people [extra every year]," said Wynne this week, spruiking his message at an industry gathering on Thursday.
"But at the same time ensure that everything we love about Melbourne is enhanced.
"It's that balancing act you have as the minister for planning. But you wouldn't want a better job in town."
In their hundreds, Wynne's audience packed out an event organised by commercial agency CBRE. The city's key developers, architects and lenders were there along with a sizeable contingent of Asian investors.
It is an audience that Wynne is keen to win over.
Victoria's planning chief had not waited for Turnbull's appointment of Jamies Briggs as minister of cities to get a grip on his own capital. But it's one that has sent a ripple of discontent through the property sector.
On November 29 state Labor celebrates a year in office. Wynne himself was sidelined for almost three months after suffering a heart attack soon after last November's poll.
MAKING UP FOR LOST TIME
Back on the field and blood pumping, the minister has made up for lost time.
More than $4 billion in major city projects have been approved this year, a run rate nearing the $4.9 billion approved by former planning minister Matthew Guy in the 2014 election year.
Wynne's focus in the first year has been the central city. Apartment design guidelines are being readied, a sensitive issue which some worry may curb affordability if enforced too strictly.
Then, in early September, the minister made a midnight declaration of interim controls for the CBD.
Tough measures cover plot ratios, which govern the amount of development – and profit – possible on a site, setbacks and height.
Debate on those measures still rages. Developer Albert Dadon dubbed Wynne a dictator. Others are kinder, saying it was a move long overdue.
"They are not to be complained about," architect Callum Fraser told the same CBRE event.
"If we have greater certainty about what we can do on sites, that prevents excessive speculation.
"Importantly it means we can get going with a greater volume of supply," said Fraser, who argues the amount of housing Melbourne needs is even greater than currently estimated.
Minister Wynne is now taking aim at Melbourne's bloated middle ring.
Much of that hinterland of quarter-acre blocks, particularly in Melbourne's east, was locked up under a new zoning system by the previous government.
Amid that sprawl – the donut ring between the CBD and the urban fringe – the real scope for growth lies.
Almost 1 million new dwellings could be built there by 2051, according to a recent RMIT University study, much more than Plan Melbourne originally envisaged.
But that can only be achieved if Melbourne finally accepts the need for more density, more widely.
Whether Wynne has the stomach for that fight is yet to be seen. A review of the zoning system is due mid-next year.
"We'll look to any modification that needs to be made to the zones on a council-by-council basis," he told The Australian Financial Review this week.
It's hardly a war cry, but middle Melbourne may prove to be a more daunting opponent than a room full of patent leather and developers.
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Nobody's Home: Australian Boom Leaves Swath of Empty Properties
Angus Whitley AngusWhitley1
December 8, 2015 — 2:21 PM PSTUpdated on December 8, 2015 — 4:23 PM PST
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Australia's Property Boom Leads to Empty Homes
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- Foreign buyers leave properties unused and reap price gains
- Vacant homes in Melbourne surge to 82,724, report says
Australia’s three-year property boom is leaving Melbourne awash with empty homes.
In the country’s second-biggest city, growing numbers of local landlords and absent overseas owners have locked up their properties -- forgoing rental income as they focus instead on price gains, a report by [url=https://www.prosper.org.au/about/]Prosper Australia said Wednesday.
Some 82,724 properties, or 4.8 percent of the city’s total housing stock, appear to be unused, said the report, which estimated occupancy rates by gauging water usage. In the worst-hit areas, a quarter of all homes are empty, said Prosper. The Melbourne-based research group is lobbying for more affordable housing through tax reform.
Driven by a wave of Chinese buyers and record-low interest rates, average home prices have soared to about A$700,000 ($505,000) in Melbourne and around A$1 million in Sydney. But with prices now cooling, the empty accommodation also masks a hidden glut of supply that could worsen any housing slump.
“Those properties need to be utilized,” said Catherine Cashmore, author of the Prosper report, Speculative Vacancies. “Having property sitting vacant has a very high cost on the economy. It’s very destructive to our national prosperity.”
Water Use
The study, now in its eighth year, assessed 1.7 million residential properties in and around Melbourne during 2014. Those using less than 50 liters of water a day -- the rough equivalent of one shower and a flush of a toilet -- were deemed vacant.
Sydney, where high-rise blocks have sprouted in the inner suburbs, is also likely to have a vacancy problem, said Cashmore. Data on water usage at individual apartments isn’t as comprehensive in Sydney as in Melbourne, she said.
Surging home prices triggered a boom in high-rise construction in Melbourne’s inner-city suburbs, squashing rental yields and leaving landlords with little incentive to find a tenant, said Cashmore.
Chinese Buyers
Analysts at Credit Suisse Group AG estimated this year that Chinese buyers were on course to take out 20 percent of new homes across Australia in 2020, up from the current 15 percent.
While the Prosper report doesn’t identify overseas-owned properties, it said a “significant proportion” of foreign-owned real estate is empty, inflating prices.
“There is a wall of money that is trying to get into Australia,” Cashmore said. “To fight those forces is going to be very difficult.”
Cashmore, who also helps find homes as a buyer’s agent, is seeing the legacy of that foreign investment spree. In some apartment blocks in Melbourne, she said entire floors have been sold and lie vacant. She said it’s not unusual for her to walk through a building and be told the owners are from Asia and rarely seen.
“It’s a growing problem,” said Cameron Kusher, a Brisbane-based analyst at property information provider CoreLogic Inc. “If these properties aren’t being occupied, it doesn’t do a lot to fix overall housing supply. It’s always going to be the risk when you sell to offshore investors.”
Artificial Scarcity
The report questions the assumption that Australia’s property affordability barriers can be overcome by building more homes. There’s no housing supply crisis, according to Prosper. Rather, unused property has created an artificial scarcity, Prosper said.
Sudden property price declines or an economic slowdown risk unmasking the vacant supply. Owners would start to sell up or look for rental income to cushion the blow from falling prices, she said.
“Suddenly, you find there’s no one there to buy it or nobody to rent it. That’s a common pattern in a housing crash,” Cashmore said. “What we’re trying to do is it to make it visible before it happens.”
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- Dec 31 2015 at 10:44 AM
- Updated Dec 31 2015 at 10:48 AM
Cooling housing market starting to hurt Melbourne apartment buyers
[img=1022x0]http://www.afr.com/content/dam/images/g/l/b/2/j/1/image.related.afrArticleLead.620x350.13yku3.png/1451520530204.jpg[/img]Apartments towers at Melbourne's Docklands.
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by Su-Lin Tan
The softening housing market has already started taking its toll on the valuations of new off-the-plan apartments.
In a sample size of nearly 2000 off-the-plan properties in Melbourne valued by WBP Property Group between 2014 and 2015, about half of the them are now worth less than what was paid for them.
The average loss was about $40,000 or about a 10 per cent loss between the time of valuation and the time of the purchase. Most of the purchases were between late 2009 and late 2015.
"In real terms, this loss equates to the cost of a typical deposit, which most people take several years to save," WBP chairman Greville Pabst said.
For example, losses ranged from $2000 for a one-bedroom apartment in South Yarra to a very large loss for a two-bedroom apartment in Abbottsford.
There are also properties with gains of $4133 for a two-bedroom apartment in Glen Huntly to a gain of $175,000 for a two-bedroom apartment in St Kilda East.
These however make up only 1 per cent of the sample The other 49 per cent of the sample size were right on the market.
"Melbourne is a resilient market and is catching up to Sydney. But there's a concern that off-the-plan apartments are oversupplied," Mr Pabst said.
"There will be a number of people who are going to get caught out by the Australian Prudential Regulation Authority changing the goal post. People are going to have deal with falling prices."
APRA clamped down on banks' lending to investors restricting growth to under 10 per cent a year. With falling property values, many recent off-the-plan buyers might find themselves in a tight spot at settlement a few years from now.
But in the the biggest housing market, Sydney, it's a different story.
"I think the fall in apartment values is very specific to the Melbourne market. I don't think you can see that in Sydney," Herron Todd White's Sydney director Kim Quick said.
"A lot of the Sydney market has caught up to today's prices. There could some areas where values drop but generally in Sydney the market has caught up to the enthusiasm."
Ms Quick said many who have acquired off-the-plans cheaply in Sydney when there was a slump during the credit crisis in 2009 and 2010 have been rewarded with a value catch-up today.
The x-factor that Sydney has which Melbourne does not is the high number of infrastructure projects lined up by the NSW government, Ms Quick added.
Places like Liverpool which is close to Sydney's second airport Badgerys Creek will not lose value. The same goes for Parramatta, the second CBD for Sydney, which has 20 years of infrastructure improvements planned.
"All these units will retail their level. Some units in the lower north shore could come back a little. And areas like the St George area such as Bankstown, Kogarah and Wolli Creek could also come back a little due to the volume of constructions out there," Ms Quick said.
For off-the-plan valuation, volume of constructions and the scale of the project surrounding the apartment affect its valuation.
An apartment acquired with the right amount of privacy and sunlight may have lost those qualities if a new tower comes up next to it.
The aspect of the apartment as well as the amount of promised amenities also affect valuations.
"If the developer promised stone, or a ducted air vent but does not deliver them, this can also affect the final valuation," Ms Quick said.
"Off-the-plan purchases come with a lot of risks especially in big-scale projects. When you buy a little unit, you don't know what you are going to get."
In the same argument, the more developed a suburb, the more an apartment or property holds its value.
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