Last night the ABC program Four Corners did a story on housing affordability which predominately looked at the afforability of housing in Sydney and Melbourne, and the battle of young people to buy a house in either of these capitals. Watching the story you may have believed that Sydney and Melbourne are the only two cities in the country in which to live.
It’s true, houses in both of these cities are expensive. But the program didn’t suggest any solutions to this problem, it just perpetuated the housing bubble theory. I have to admit I am not that familar with Melbourne or Victoria housing data so this article will look at Sydney and NSW.
The geography of Sydney means that land supply is not infinite and as a result the basic rules of supply and demand apply. When demand for a product is greater than the supply of a product the price will increase.
A predominate driver of demand for property is Australia’s population growth. In 2014-15 Australia had net overseas immigration of 168,200 people all of whom have to live somewhere and it seems that the choice of place to live for those coming to Australia is predominately our two largest capital cities, Sydney and Melbourne. NSW’s net population increase in 2014-15 was 59,477.
How do we encourage people to choose alternatives to Sydney and Melbourne?
Jobs. One of the biggest impedments for people choosing to live in the large regional cities such as Newcastle, Wollongong and probably even Geelong in Victoria is jobs. The reduced promotional opportunities in large regional centres is a big disincentive to leave the main employment hubs of Sydney and Melbourne. Given the advances in technology, the need for business and government departments to be located in Sydney and Melbourne must be diminishing. If a headquarters can be moved from the Sydney CBD to Parramatta or Macquarie Park within Sydney then why couldn’t that same business be moved to Wollongong or Newcastle. What stops businesses from choosing large regional centres? For these centres to be seen as viable options by business, government must be involved in demonstrating their viability through the relocation of government departments out of Sydney.
The large regional cities in NSW have so much to offer from a life style perspective. That’s why often people who move to cities such as Newcastle never leave, and why an increasing number of people demoralised by the cost of housing in Sydney are beginning to look at what other options are available outside of Sydney. Finding a job in these locations is what stops so many, but it is also a reason business is reluctant to take that step too – the lack of suitably qualified staff. It’s a bit like the chicken or the egg. Which comes first?
Regional universities are doing a great job of skilling the work force, but lack of job opportunities often results in graduates having to move to Sydney.
The prestige of living and working in Sydney plays its part too. It’s seen as the place where the best of the best work. The best doctors, the best lawyers, the best bankers. Imagine if this view could be changed.
Is it time for the NSW State goverment to start actively promoting either Newcastle,the Central Coast or Wollongong as a satelite city. A bold step might be to move the State Parliament out of Sydney. Now there’s an idea!
Love to hear your thoughts
Margaret