The bit about Melbourne picking up but Sydney being the massive under-supply basket case followed by Brisbane is common.
Sydney is geographically bound by the Blue Mountains in the West and burdened with red tape that costs far too much to bring green field sites to market. Not going to improve any time soon. In the meantime, the population of Sydney just keeps growing...
Cheers,
Michael
Victoria has supply side incentives that were always going to cause new supply to come on line. The state gov has regional grants for FHB buying new as well as less generous ones in the city.
I agree with you on Sydney with respect to red tape but it is not a physical shortage of land "hemmed in" by the blue mountains which is the problem at all.
Look at this place:
http://www.realestate.com.au/property-house-nsw-kellyville-106757259
OK its not zoned residential blocks yet but I would agree with the agent that it is a walk up start in the next 5 years.
So 5 acres at a rate of 3 per acre, keeping a bit for parks and roads and the blocks at 450sq.m a piece typical for kellyville. So 15 housing blocks for 2.75million.
Take off the value in the existing dwelling say 200k? it looks OK.
2.55million divide 15
170k per raw unfinished lot. This seems to be about where kellyville was when there was alot more available with sites fully mapped out for sale 15 to 18 months ago.
Anyway 170k per lot is pretty expensive when beyond kellyville there are massive near limitless paddocks of land available to house about 50% of the entire area of Sydney! Take a few (about 50) years to use that up even if it was all released now!
Now go somewhere where there is no likeliehood of getting a development up in your lifetime due to their consolidation decision in NSW like Sackville or Maroota and see what you can get for 1.8million?
http://www.realestate.com.au/property-residential+land-nsw-sackville-2793513
125acres of pristine grazing land. Don't like the sound of the conservation area... But much of sackville is free of this issue. Now there is absolutely no chance whatsoever of developing this into resi!
Consider now the premium for residentially rubber stamped blocks or potential resi lots in Sydney, agree there is an amenity / value difference too betweeen Sackville and Kellyville but nothing a freeway for 2bn to hornsby would not fix. Give a developer the right to develop all of Sackville and they would make a quid in the current market even if they had to build the freeway! Anyway the premium is no where near the factor of 10 apparent in the 2 market prices in my opinion and much of it is a regulatory premium coming about from government land release or more accurately a lack of government residential land release growth planning etc.
Where am I taking this: The government through restricted release of land has caused a regulatory premium of upwards of 100k per lot in Sydney. Sure people hoard land for price appreciation but who wouldn't when you know the government is so slack at land release it can only go one way...
If they released just 10% of the remaining cumberland basin we don't need a home buyer strike, we would have increased building activity, more affordable existing homes in time, massive government revenue granted they will have to invest in a big way into infrastructure probably spending all of this, but if they want a go ahead economy in NSW then this is one way they could achieve it. I like to think that one day they will get there heads around the side affect of their urban consolidation plans, probably at the threat of a recession (like 50% stamp duty exemption for new this was good while it lasted!) and it will be good for the economy but bad for house prices in Sydney more than any other capital in Australia due to its ridiculous land use policy, implementation of policy...
I fear however they will just let Sydney wither on the vine as far as population growth goes, but granted stopping any new development is the single best thing they can do for property appreciation... Anyway young professionals over time will opt as I have to move elsewhere because the pay is the same in our other capitals but the living better. Fine if you own your home pre 2000 in Sydney if not why the hell would you stay there? Makes Perth look positively affordable living and the irony is Perth is the one with the recent price falls and look of a place that might even suffer some more over the next 6 months.
