Skyscraper City Forum banner
1 - 4 of 4 Posts

·
Registered
Joined
·
1,696 Posts
Discussion Starter · #1 ·
From the Age today.

Sydney becomes our sickest city
By Tim Colebatch
May 16, 2005

Page Tools
Email to a friend Printer format
The high cost of housing in NSW, particularly in Sydney, has spurred a fall in the under-40 population bracket as younger people leave the state to buy a home.
Photo: Rob Homer

The 1990-91 recession was centred in Melbourne. In 2004, the slump in Australia's economic growth is hitting hardest in Sydney.

The statistics are unanimous. NSW is lagging the rest of Australia across the board: on job growth (especially full-time jobs), consumer spending, housing construction, business construction, and growth in population, demand and state output.

In 2004, the Bureau of Statistics estimates, the trend growth in demand in NSW was just 2.8 per cent, barely half the rate of the rest of the country. Its population growth for the year to September was 0.7 per cent, also just half the average of the rest. And, over the three years to June, output grew just 7.6 per cent in NSW but 13.3 per cent in the rest of Australia.

This is not good news for the rest of us. Sydney is Australia's global city, its financial and service capital. One in five Australians lives there, and almost one-quarter of our gross domestic product is created there. It will be hard for Australia to get back to economic health while Sydney remains sick.

The question is: will it? Is the slump in NSW relative to the rest of Australia since 2001 due to a confluence of one-off factors, or is it something more long-term?

Advertisement
AdvertisementAccess Economics, a team of sharp minds, is optimistic. It sees the slump as almost at bottom. In the financial year just ending, it estimates, NSW will grow by just 0.9 per cent, the slowest of any state. But it sees a modest rebound ahead, with NSW more or less matching the nation's growth rate over the coming four years.

Solid growth in Asia will pump up demand in Sydney's financial and service industries, including tourism, it says. Engineering construction remains strong, and the Carr Government's $30 billion infrastructure plans should keep it that way.

But there are other, as yet unreported, statistics that point to a more disturbing trend.

They show that the decline in NSW's population growth has been overwhelmingly among those in their 20s and 30s, and in young children. And that slump has been largely in Sydney.

From 2001 to 2004, the rest of Australia grew by 542,000 people: 110,000 aged under 40, and 432,000 aged 40 and over.

NSW grew by just 156,000. But it actually went backwards among the under-40s, losing a net 11,400 younger people, while gaining 167,400 of the middle-aged and elderly.
Talk to them, and one reason is clear. Sydney's real estate prices remain about three years' average take-home pay higher than in Melbourne, almost five years' higher than in Brisbane, and almost double average prices in Perth and Adelaide.

House prices in Sydney were always higher, because Sydney is where land is most scarce. But as successive real estate booms and home renovations almost doubled the average price of a house relative to wages, the affordability gap between Sydney and the rest widened.

Even after a steep fall in prices in 2004, the Real Estate Institute and AMP Banking report that, in the December quarter, the median price in Sydney was $89,500 higher than in Melbourne, $162,500 higher than in Brisbane and $204,500 higher than in Perth. That's a lot of income to sacrifice just to get a foot on the ladder of home ownership. What drove Sydney's prices so high? More unreported statistics help explain.

Between 1997 and 2003 NSW, with 34 per cent of Australia's population, averaged almost 50 per cent of all lending to housing investors in the nation.

Between 1993 and 2003 the amount of money banks lent housing investors in NSW rose more than tenfold, from less than $3 billion a year to $33 billion, or 12 per cent of the state's GDP. In 2000 and 2001, investors in NSW property markets borrowed more money than those in the rest of Australia put together.

Since the Reserve Bank raised interest rates in late 2003, new borrowing by owner-occupiers slumped briefly, only to rebound to new record levels. It is investor housing that has fallen. In year-on-year terms, it has slumped 15 per cent: from a peak of $72 billion to $61 billion in the year to March 2005.

But that slump has been very uneven. In the March quarter alone, lending to investors in booming Western Australia was up 26 per cent on a year earlier. In South Australia it was slightly higher, in Victoria slightly lower, while in Queensland it fell 11 per cent and in NSW 15 per cent.

Even so, NSW investors are still borrowing more than investors in Victoria and Queensland combined, and their share of the national total remains 41 per cent - compared with less than 30 per cent in earlier downturns. If Sydney's housing prices need a painful correction to make the city affordable to young people, that could be a long way off.
 

·
.
Joined
·
328 Posts
i think you would find a lot of the younger age group is moving to the central coast, for the cheaper housing and the life style.

must be a slow news week so far, how often can smh & age recycle stats they got a few weeks ago ;p
 

·
Registered
Joined
·
1,696 Posts
Discussion Starter · #3 ·
^^^ yah, perhaps. this is an opinion piece by Tim Colebatch though.
 

·
Registered
Joined
·
1,080 Posts
rob_ said:
i think you would find a lot of the younger age group is moving to the central coast, for the cheaper housing and the life style.
Isn't that what older people like to do, moving away from hectic city life?
 
1 - 4 of 4 Posts
Top