We had the pleasure to attend the UDIAs state conference this week. This years’ examined the significant transformation Greater Sydney is facing and how we will navigate this challenging development environment.  Speakers included the Hon. Rob Stokes and a range of other highly respected government and industry leaders.

These industry leaders provided valuable current insight to the market, planning priorities, and factors which influence future land development.

ROB STOKES (minister for planning)

• Priority is on housing diversity across SYDNEY
• Need more housing particularly in missing middle
• A revise medium density code to be implemented to support SEPP seniors

ELIZA OWEN (Domain)

• current housing downturn
• median house price $1.034m
• prices improved over August
• Expect prices to increase 2-5% in 2020
• High demand for Sydney
• Prices have bottomed our in Sydney

finance and credit

• Cash rates dropped and has stabilized market
• RBA advises a 1% drop in cash rate often results in a 8% property price over 2 years
• Mortgage lending is increasing
• Serviceability assessment has eased

dynamics of downturn

• Clearance rates increasing
• volume of sales was a 20 year low but finally now increasing
• People will sell as prices rise

population and dwelling demand

• Need 40,000 dwellings per year until 2036 to match population projections
• Population growth has declined

JON LAMONTE (CEO, Sydney metro)

• 66 km metro from rouse hill to bankstown

North West Metro

• 2036 expect 60% of SYDNEY population will live in the metro corridor
• 65ha of govt land around metro
• First development approved
• More sites to come at show ground

City & Southwest

• Chatswood to Sydenham
• 2/3 of tunnel is now complete
• Victoria cross station North Sydney is biggest station – $470m Cost

Metro West

• Massive change and project f0r SYDNEY
• To link city to parramatta and its surrounding new precincts
• Decisions/details are to soon be released

Greater West Line

• Connect western Sydney airport to St Mary’s and Macarthur
• Currently finalizing business case

Forecast

• Aus dollar is weaking.
• Cash rate RBA will cut rates
• Feds will cut rates
• AUD$ likely to be $0.67
• US economy slowing down
• Works will remain uncertain and people will buy US$
• Unlikely RBA will go to zero rates unless US do and only likely if something  like GFC
• Likely US rates will drop in next year
• Equity markets PE ratio attractive
• Commercial property yields are high 5-6%
• AUD $ driven by commodities and interest rates
• AUD should be lower than it currently is
• Commodities likely to drop due to China slowing

 The economy

• Impacted by population growth
• NSW looses population to Qld and Vic
• Consumption Growth like to drop and very low and is worse than was in the GFC. Most with cars and household goods
• Have had No recession for 28 years
• Wages growth at 2% rather than past of 4%
• AUS wages too high
• Not likely to have recession but will continue with low growth rates ie 2%
• Fed govt likely to get surplus next year and then they will stimulate economy with projects!
• Construction cycle – completions currently low
• Collapse in approvals that has occurred will create shortage in 2020-21
• High rise approvals likely to drop to 7000 by 2021 and similar to GFC levels
• Supply of High density is currently more than demand
• End Next 2020 and early 2021 likely demand will overtake supply
• Clearance rates getting back to book period but supply / volume is low
• As clearance rates increase then so you will prices lift
• High prices will increase turnover
• Sydney dwelling prices likely to lift 12% over next year
• New lending is up

PANEL (Avid, Crown Property, Frasers Group)

Topic – bringing back buyers

• Pre election was challenging
• After election sales increasing
• Avid prices / sales began to drop Aug 2018
• Need to build good quality apartments / strata.
• Buyers likely to grow
• Frasers: Price growth in inner ring may take time
• Crown property: still have 50% foreign investment
• Crown property: “In tough market it is good to talk to existing clients and build relationships ie boat day, Porsche day, community day and not talk work“
• Crown property: “buyers don’t want a friendly company but a friend in the company”
• Crown property: Don’t drop price but offer incentives.

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