Covid impact: Population growth

This week’s post is about population growth.

I usually don’t post about population stuff until December each year as I like to use the stats for the full financial year, but the recent ABS release warrants some commentary as it represents the first full year of Covid-affected population growth.

And affected it was.

Australia’s population has stalled, standing at around 25.7 million as at the end of March this year.  This was an increase of just 35,700 over the past twelve months – the lowest growth rate since our population declined in 1916, due to World War I.

In terms of natural increase – births outweighed deaths – by 131,000 – but this was offset by substantially more people leaving to go overseas than coming into Australia.  Net overseas migration (NOM) was -95,300 for the 12 months ending March 2021.  NOM is historically positive, and a major driver of Australia’s population growth.

We’ve had a NOM between 200,000 and 300,000 per annum for many years until Covid hit.

Table 1 breaks down last year’s population change by state and territory.

New South Wales continued to eke out small population increases, as overseas arrivals were positive – due to taking the largest share of returned travellers into quarantine – yet NSW’s NOM net result was negative, as more people left than arrived.  Interstate migration remained negative, but this is not a new trend for NSW, as it has long been the case pre-Covid.

Victoria’s population declined substantially over the last 12 months.  The previous five years, Victoria had been the fastest growing state or territory in Australia.  Last year’s result was the largest absolute population decline Victoria has ever had.  As a percentage, it ranks third, behind 1916 and 1915.  Most of this recent decline is due to negative NOM (-53,500) but also strong interstate migration loss (-18,000).  Being the most lock downed location in the world has no doubt had an impact.

Queensland accounted for more than 100% of the national population growth last year; and don’t the local talking heads like to tell everyone about it.  NOM there was negative too, but the Sunshine State made up for it with high internal migration – but this is not a new trend.  Net interstate migration was higher than in previous years – with few more coming in and less leaving the state – but it doesn’t stand out that much in a historical perspective.  See chart 1.

Western Australia is also growing strongly. The state with the toughest border controls still managed to attract more net internal migrants last year since 2012.  A hot iron ore price (up until recently) meant more people come in and less leaving, offsetting the loss of the overseas migrants, and adding to natural increase there.  Yet how long this can last is questionable.

Covid’s impact

One thing which is clear from these figures, is that the ‘Covid-Zero’ states which have not been heavily affected by the virus and associated lockdowns, are growing, while the most affected states are declining or stable in population.

There is a clear movement out of New South Wales and Victoria into Queensland and Western Australia whilst South Australia has turned the tables from losing population interstate, to a slight gain.

Looking forward

Population growth is expected to recover once international borders are re-opened, which, as at the last guidance, will be from mid-2022.  Immigration accounted for two-third of Australia’s population growth prior to the pandemic and the federal government appears committed to resuming past NOM flows.

Current Treasury projections has Australia’s annual net immigration back to 235,000 people by fiscal 2024 and the latest Intergenerational Report (IGR) suggests that NOM – again averaging 235,000 people per year – will apply for decades to come.

If this happens Australia’s population would increase by 13 million people (over 50%) over the next 40 years to 39 million people – equivalent to adding another Sydney, Melbourne, and Brisbane to Australia’s existing population.

‘Big Australia’ here we come.

But one must wonder – especially now that Covid has given us cause for pause – if lifting immigration back to its previous levels is the wise thing to do.

For mine, the first and foremost goal of public policy should be to protect the welfare of existing citizens and not make a problem worse.

‘Big Australia’ immigration, on most fronts, violates this principle.



My post about Big Australia earlier this year outlined 10 reasons for a rethink when it comes to high population growth rates.

And if that list wasn’t compelling enough I can now add an eleventh reason – and this one is likely to resonate with many – being that recent work by the IMF found that a lower rate of population growth helps reduce interest rates.

Since the GFC, lower population growth in the relevant countries has helped reduce their real interest rates by 40%.

Working from home, an update

There is quite a range of conjecture at present when it comes to the number of people working from home and whether this trend is going to retain some permeance once we return to some form of normality.

I wrote about working from home in the early days of Covid and you can revisit that post here.

That post outlined – prior to Covid – that some 29% of Australian workers did undertake some work from home.  This is up 1% from ten years ago.

Yet it was estimated – again prior to Covid – that just under 10% of the Australian workforce work at home on a regular basis.

Therefore, we can estimate that about 1.3 million workers across Australia worked from home on a steady basis before March 2020.

We also know that about 20% of Australian businesses (not employees here but businesses) had some employees teleworking from home prior to Covid.   So, inversely some 80% businesses didn’t support working from home in early 2020.

So, what has happened over the last 18 months?

A recent release from the ABS finds that 27% of those businesses that didn’t allow teleworking prior to Covid, have introduced working from home in response to Covid-19.

The ABS study also found the 27% of businesses that did support teleworking prior to Covid increased the number of their staff working from home over the last 18 months.

In addition, a further 33% of these ‘did support’ businesses increased the frequency of staff teleworking.

As a result of these changes, it is estimated that today, some 31% of the Australian workforce works from home on a consistent basis.

This amounts to about 4 million workers, and this is three times the number of regular teleworkers prior to Covid.

The current breakdown of the number of teleworkers (31%) by business is as follows:

  • 11% of businesses have under 25% of the workforce teleworking,
  • 7% of businesses have between 25% and 75% such workers, and
  • 13% of businesses have teleworker numbers currently set between 75% and 100%.

So, if appears that it is either some of business’s employees or almost all of them telework.

The future?

Looking forward 1% of Australian businesses expect to increase the number teleworkers, whilst 60% expect that the current levels to remain steady post Covid.

At present only 9% of businesses expect to reduce or eliminate the number of teleworkers in the future.  And 11% – at this stage – just don’t know what the future holds.

Australian business believes that teleworking has helped improve staff wellbeing (45%); reduced overheads (27%); increase productivity (26%); retain existing staff (18%) and has broadened their potential recruitment pool (6%).

When it comes to the teleworkers, most say (65%) that what they like the most about working from home is that they do not have to commute to and from work.  A further 58% like the flexible scheduling that working from home allows.  This is followed by being better able to complete work (38%) and being able to spend more time with the family (36%).

Another study, this time from the Australian Government Productivity Commission, found that three quarters of teleworkers survey considered that they were at least as productive working from home as from the office.  It is of little surprise that employers had a different view.  Yet the difference between the two was marginal overall.

Working well from home depends on the teleworker being able to so effectively and this is determined by their role and tasks (both at work and at home), and their family and housing circumstances.

The latest research (mid-2021) finds that 74% of survey teleworker respondents worked from their own work room or dedicated work space in a shared room.

Another three quarters of those surveyed also had the equipment at home to work successfully.

My comments

With the two big states still in extended lockdown and several others exercising strict border controls, it isn’t that surprising that about a third of Australian’s are currently working from home.

What is surprising – well to me anyway – is that some 60% of businesses don’t expect to see a change once we resolve how we live with Covid.  Given that an addition 11% of businesses remain undecided as to how they will manage staff post Covid restrictions, this 60% could be even higher.

If that eventuates then we will see major changes across our urban and regional landscapes.

But I still reckon that once we get our freedoms back – well some of them at least – many, if not most, will go back to the previous long-term work patterns.

We are social creatures and our infrastructure (and who owns it) is centred around expensive physical assets and almost all of it involves people working together in concentrated urban centres.

As I stated in early 2020, working from home has big urban advantages, but I just don’t see us – collectively – changing our entrenched patterns of behaviour that much once finally get a grip on how we manage this respiratory infection.

But that 60% figure, I must admit, has given me pause for thought.

Stuff Worth Knowing #6: SEQld attached dwelling demand

Last week’s post sparked a bit of conjecture with a select group of town planners, some developers and inner-city leftie types who, in summation, told me that my future detached housing demand figures were way too high and that many more people will live in apartments and other attached homes across SEQld in the future.

Let me paraphrase some of the replies I got.

Suburbanites are wrecking the planet!

We cannot afford to keep building more infrastructure so far away from the centre of town.

There is way too much traffic – we don’t need anymore – people living in apartments don’t use their cars as much as people who live in houses.  We use public transport.

No wonder Australian’s, on average, are getting obese.  Too many live in suburbia, they exercise less and have to drive everywhere.

And if the last reply didn’t have you shaking your head, then wait for it…

Covid infections are higher in the suburbs.  Fact!  Apartments are safer as we can lockdown more easily.  Many of us can walk to things, not drive or even need to catch public transport.  More will opt to live downtown and in apartments in the future.  It will be safer.  We should mandate that this happens.

Well, my aim isn’t to bust these cat’s bubble.  And I definitely don’t want to enter the Covid debate.  Well not this Missive!

Plus, I am not against inner city living, apartments or other types of attached dwellings.  In fact, far from it.  Much of my firm’s project advice over the past 25 years has been helping attached dwelling based developments achieve a better market match.

But for those that are interested in debunking some of these urban myths go here.

My intent this post is to outline the likely size of attached dwelling demand across SEQld in coming years and highlight some issues the region faces – with regards to housing a growing population – given the current planning mindset that attached dwellings, and in particular apartments, will satisfy much of the future dwelling demand.

To assist, I have included three tables and a chart.  These are at the end of the post.

Attached dwelling demand

I estimate that there is annual demand to build some 4,700 new attached dwellings across SEQld over the next five years.  The underlying demand for detached houses is double this volume.  Revisit last week’s post.

In contrast to the detached housing market, the SEQld attached housing market has a lot more potential to oversupply the market over the next five years.  The total underlying demand for attached dwellings between 2021 and 2026, I estimate, is around 23,500 new dwellings, yet the potential supply (and expected take-up by state and local government planning) exceeds 62,000 dwellings.  See table 1.

In contrast to the overall SEQld trend, the municipalities of Brisbane, Moreton Bay and the Sunshine Coast, could face an undersupply of new attached dwelling development opportunities in coming years.  Again, visit table 1.

But one must consider that much of the attached dwelling developments approved have yet commenced.  This overhang amounts to some 3,250 developments and totals over 113,000 attached dwellings.

In addition, there were 66,000 new attached dwelling approvals across SEQld over the past five years, so this yet built but approved attached dwelling supply, is 1.7 times larger than all of the new attached dwellings built across SEQld between 2017 and 2021.  See table 2.

The chart illustrates that over 50% of new approved attached dwellings have yet to be built across Queensland in recent years, whilst the proportion of delayed detached housing starts averages just 15% over the same time frame.

It is true, in general, that the economics of delivering attached dwellings is often harder than for detached product.  But also, investors mostly buy attached dwellings whilst many more owner residents buy detached homes.  Go here for more.

The investor market is more easily spooked and hence is much more cyclical when compared to owner buyers and attached dwelling demand suffers as a result.

Also, as I discuss in detail in my Master Class sessions, ‘density needs to be offset’.

The smaller one’s private dwelling space the larger (and better) the surrounding public space needs to be.

Whilst SEQld is improving in this regard, I do wonder if it has enough offsets (in short amenity) to cater for the expected uptake in higher density living.

And folks hosting the Olympics and building a few more white elephants doesn’t cut it.

Many apartment residents live alone or in a couple relationship.  Most are young.

What do young people want when it comes to amenity?  That is the question.  I can tell you from our work that it isn’t the big infrastructure spends but the stuff in between the buildings and the grandstanding monuments.

You need funk, spunk and vibe.

But maybe that too is no longer allowed to enter the state?

Anyway I digress.

Finally, table 3 shows that about three-quarters of SEQld residents live in detached houses and some 27% reside in attached dwellings.  True the proportion of people living in detached houses has fallen from about 80% twenty years ago to about 73% today, but in recent years the rate of this decline has slowed down.

Table 3 also shows that 2.9 people typically reside in a detached house (across SEQld) and 1.9 people, on average, live in an attached dwelling.

Importantly table 3 indicates that the proportion of unoccupied attached dwellings is twice as that when compared to detached homes.

My comments

Most people prefer to live in a detached house.  Their families and possessions fit better.  They often have room to grow, and they can improve the property over time.

Our work suggests that renovating a detached house offers more upside when it comes to resale value when compared to improving at apartment or townhouse.

Also, when factoring in all costs, including travel, detached housing is often more affordable.  This is especially the case when it comes to families.

Importantly, detached housing is mostly on freehold title.  Australians don’t seem to like community or building title.  Such schemes are often viewed as a fourth tier of government.  Many also don’t see the value in body corporate fees.

Many of us also like a connection to the ground.  Gardens are important.  So is the backyard BBQ, or fire pit, these days.

Yes, you can BBQ on your balcony or visit the roof top garden in your apartment complex, but our interviews with apartment residents suggest that whilst this was the intent when buying, after moving in, it rarely happens.

Again, I am not anti-apartments, but with such headwinds it takes a lot to make a good apartment (or townhouse) complex.  Go here to see my list of things that I think make a better apartment.

Also, there is nothing wrong with suburbia.  This is where most people live.  Yet in SEQld’s case, too much public infrastructure is focused downtown.  The 2032 Olympics win will further entrench this trend.

Plus, more people are actually housed in detached housing (when factoring in household size and occupied stock) than attached dwellings.

So, if accommodating a growing population is the goal – and of course accumulating development and associated taxes and charges along the way – then the plan should be to better cater for the market demand and, in this case, accommodate more detached product.

This can be done by allowing owners to maximise (with limits) their existing land by building granny flats or via subdivision.  Smaller lot sizes should be encouraged.  As should co-living and dual occupancy housing.

So should detached housing and/or freehold title dwellings solutions when it comes to the ‘missing middle’.

Plus, if group governance (and their fees) are part of the problem when it comes to accepting attached dwellings, then allow some urban housing forms like townhouses, terraces and ‘plexes’ to be governed by the owner and not a body corporate.  This happens interstate – with much success – so why not across SEQld?

And yes, all this can be done without carpet bombing the suburbs.

End note

The demand for detached housing is high and will remain so.  For most this form of housing makes the many economic and demographic sense.

For mine, urban regions that cater for this demand will be more desirable than areas that don’t.

Apartments and the like are an important part of the housing mix, and they will continue to grow in popularity, but this latent demand is far less in SEQld than the planning intelligentsia think.

Yet the demand for attached dwellings can be lifted.  To do so needs a major rethink.  It involves more offsets.  This is often the soft stuff.

Build it and they will come just won’t cut it.

Supporting information

Stuff worth knowing #5 – SEQld Land Market

I started 2021 off by writing a series of ‘stuff worth knowing’ posts, they appeared to be popular with a number of peeps asking me for more.  In typical fashion it has taken me some time to respond.  But better late than never.

This week I cover the south east Queensland land market.

Four tables and three charts accompany this missive.  They are located at the end of my summary.

SEQld land market summary

Even when factoring in Covid’s impact, south east Queensland’s population growth rate is expected to increase over the next five years to average around 38,000 new residents per year.

As a result, there is a need to build some 14,500 new dwellings each year across the region, of which I estimate around 10,000 will need to be for detached dwellings.

Table 1 shows that most municipalities across south east Queensland do not have enough land supplies to cater for this demand, with only two local council areas having enough potential supply over the next five years, being Logan City and Lockyer Valley.

Chart 1 shows the interplay between underlying housing demand and dwelling registrations.  For mine, the most accurate measure of actual new housing supply is a dwelling registration.  This happens when the property title is transferred from the developer to the buyer and takes place at settlement.  Housing registrations across south east Queensland are well below underlying demand.

The undersupply of new housing, especially detached housing supply across south east Queensland, is now critical, with only 36 land estates releasing more than 50 allotments during 2020.  See table 2.  This is down from 62 similar sized land releases three years ago, and an alarming 93 comparable land estates in 2017.

As a result of increasing population growth (coupled with low interest rates/easy credit and various government incentives) land sales are increasing across south east Queensland, but with tight supply, land prices are rising too and sharply.  See charts 2 and 3.

Table 3 shows that some 17,000 urban allotments sold across south east Queensland during financial, which is up from 11,500 sales the year before.  The median urban land price across the region now exceeds $300,000; the median urban lot size is 425m2 and the median price of land on a per square metre basis is $710.  The median price of a new house and land package is close to $600,000.

And in conclusion, Table 4 shows that there is now little new land development that supplies allotments over 600m2.  The supply of new land sized over 1,000m2 is particularly tight.

Supporting information

A case for more dual occupancy housing

Dual-occupancy detached housing provides two separate residences on the same titled allotment.  A main residence and an ancillary dwelling are supplied, in which the ancillary or secondary dwelling is smaller than the main residence.

Typically, up to five bedrooms and between two and three cars (on site) are permitted in a dual-occupancy detached house; with the ancillary dwelling having one or two bedrooms.

Whilst they should, in my mind, be the same everywhere, planning regulations vary amongst local councils across Australia.  This lack of conformity (with very clear guidelines) is holding back the creation of this important dwelling stock.

At present one in five of Australia’s households hold two generations and some ten percent hold three generations.  These figures are expected to rise to around 25% and 15%, respectively, within the next decade.

Yet the supply of housing that caters well for multi-generational and multiple tenants is in short supply.

Our work suggests this demand could be as high as 25%, yet, we estimate, less than 5% of Australia’s existing housing stock successfully caters to this market.

For investors, dual-occupancy product already shows a much higher return than most other housing types.  More people are sharing accommodation and a key to getting a better rental yield is to hold property that facilitates sharing.  Two sources of rental income are often better than one.

For owner-occupiers such dwellings appeal to multi-generational households.  This product also appeals to first home buyers and empty nesters too.

Future housing demand

What does the future hold?

Our work suggests that demographics play a vital role in shaping future housing demand. So what does Australia’s demographic shape look like over the next decade?

Two demographic segments are set to feature, ageing Baby Boomers and Millennials.

Most ageing baby boomers look to downsize/retire in their local area.   But many are not that interested in trading in their detached home for a tight mid-to-high rise apartment.  A ‘middle ground’ product is really wanted.

Better still, is one which can accommodate a relative, grandchildren, visitors, a tenant and in due course, a live-in carer.

Millennials, many of whom are now buying their first home, often look for assistance to help pay the mortgage.  Many now take in a tenant.

This younger demographic segment has a different mindset to their parents when it comes to property investing as they understand the pitfalls of sharing rental accommodation and often buy an investment dwelling that properly caters for two or more tenants whilst maintaining a rental premium.

In short both segments like dual-occupancy housing.

Rent and price analysis

Recent analysis by us has found that having a home that is purpose built to hold a multigenerational household or two (or more) tenants can lift the overall properties value by up to 20% and adds around a third more to an investment properties rental income.

Our work when looking at the South East Queensland market, suggests that dual-occupancy homes can achieve gross rental yields between 6% to 8% for permanent tenancies and between 15% and 20% for short-term occupancies.

Plus when looking at recent housing resales – again across South East Queensland – we found that dual-occupancy houses resold for between 12% and 15% more than other dwellings in the same location without a dedicated secondary abode.

Little wonder that the demand for dual-occupancy housing is high and rising. 

Price forecast, Part 2

Last week I posted about the short-term direction of house prices.

To recap there appears to be a clear relationship – causation not correlation – between the annual change in housing finance (when brought forward by six months) and the annual movement in house prices.

Two tables help outline the short-term future direction of Australia detached house prices, by capital city.

Table 1 shows – and assuming the historical relationship between housing finance and detached house prices hold – that the median detached house price across Australia could be in excess of $1million by the end of 2021.

Table 2 outlines that over the past six months, detached house prices rose by 12% across Australia – and again if the past link between the growth in housing finance and house prices continues – then Australian detached house could rise by $210,000 or as much as 23% between the 30th June and 31st December this year.

My comments

House sales are rising whilst stock listed for sale is declining, adding another string to the housing market’s bow.   Lockdowns are giving people time to investigate buying, whilst keeping supply tight.  Loose credit and record low interest rates are adding fuel to the fire.

Crazy stuff!

Price forecast, Part 1

Earlier this year I posted about the short-term direction of house prices.

There is a clear relationship – causation not correlation – between the annual change in housing finance (when brought forward by six months) and the annual movement in house prices.

Two charts help explain the short-term future direction of Australia house prices.

Two charts

Chart 1 suggests that house prices are likely to surge over the next six months.

In my May post – via chart 2 – I suggested that if the past relationship between housing finance and house prices plays out over the next six months, then it is possible that Australian house prices could rise by 14% for the 2021 financial year and the annual increase could be as high as 25% for the year ending September 2021.

Chart 2 below shows that the annual house price for fiscal 2021 came in at 18.8% (so higher than the forecast 14%) and the annual growth rate for the year ending September is still holding at around 25%, whilst the yearly growth rate for calendar 2021 looks like it could come at around 38%.  Yes 38%!

End note

Despite the rolling lockdowns and talk of a double dip recession the housing market appears to be gaining heat, not cooling.

And as I stated last May too, without much wage growth and persistent local unemployment (and especially underemployment) one wonders how long this can last.  Also, one must ponder when APRA and the RBA will step up to the plate and slow this down.

To reiterate that won’t happen this side of a federal election.

Yet a lot has happened in the last three months and given recent events, the federal poll looks like it will be now held at the latest possible date – late May 2022 – rather than in 2020.

So, the good times – housing market price wise – look set to continue for a while longer.

Next week, I will post part 2, looking at possible short-term price growth by capital city.

People’s Olympics

I recently heard the Australia Census labelled as the People’s Olympics.

I think that is a good description, as it is us self-reporting, standing up and being counted.  It is an important event, not only for folks like me who use the information to help make a crust but also because we are telling the government who we are, where we live and what we do.

This Census will be a bit different – given all the Covid stuff – and some longer terms trends, well established from previous counts, might appear to be broken when the 2021 results come out sometime in late 2022/early 2023.

I have written about these trends before.

I do think that the 2021 Census will throw up a fair bit of ‘noise’ in relation to many of these trends, but future counts are likely to see many of these tendencies snapback to their longer range leanings.

Less renters

For example, one thing the 2021 Census is likely to find is that the proportion of people renting across Australia has declined since 2016.  This goes against the longer term trend.

Recent survey work by the ABS shows that during calendar 2020 the proportion of Australians renting fell from 32% in late 2019 to 27% in late 2020 and the ratio of owners with a mortgage rose from 33% to 38% over the same period.

On one hand this isn’t that surprising given record low interest rates and several government incentives – like HomeBuilder – to encourage first home buyers, in particular, to borrow and build a new home.

Yet on the other mitt, this is somewhat strange stuff when you think that during 2020 Australia experienced its first recession in yonks – forced as it was – and that business and consumer confidence was low.

I also believe that many of these new first home owners once they have lived in their new home – which more often than not is located in the outer suburbs – for the required time period as specified in the relevant government stipend will then rent that dwelling out and move back either with mum and dad or go back to renting closer to town.

Why?  Because builders and land developers tell me that a quite a few of these new home owners, on settlement, start asking questions about mandatory occupation time frames and how much rent their new home would achieve.

A few Australian home builders have insinuated to me that this percentage is a high as 50%.

Living alone?

The latest ABS data suggests that one quarter of Australians live alone.  Past censuses indicate a similar proportion.  This census will most likely show a similar result.

Yet I believe that this is an overcount, as a lot of people designate that they live ‘alone’ but really, they live ‘independently’ from others in a household.  They don’t have a binding relationship with others in their abode at the time of the official count.

On the flip side the proportion of multi-generational households and group living is undercounted.  This is especially the case when it comes to rental accommodation.

The number of cars parked in city streets suggests that there are more people per household than the official statistics suggest.

For mine, we are more crowded house than an empty one.

Final comment

I do fear that 2021 will be one of our last census counts.  Other countries have dropped their official counts and replaced the data set with other measures.

True these other measures are often timelier, sometimes more accurate (take household and personal income as an example) and appear less expensive that doing a full domestic count.

The 2021 census is estimated to cost $300 million.

But the alternative to doing a count – remember it is us telling the government who we are, where we live and what we do – is the government sampling us and then telling the electorate who we are and what best to do.

The census is transparent and mostly accurate whilst any replacement is very likely to be opaque at best and stacked sky high with hidden agendas.

As a case in point, just look at Palaszczuk’s use of focus groups to help determine Queensland’s Covid reaction and extent of restrictions rather than qualified medical advice.  Moreover, despite footing some $528,000 for such research (to date) the public cannot view these results.

The Queensland premier of course isn’ Robinson Crusoe when it comes to such spurious acts.

Surely, we have enough fake news and marketing spin without adding more fuel to this fire.

Also, such action sets a dangerous precedent – if we replace counts with sampling or target focus groups – then why have elections if a sample of voter intentions is cheaper, timelier and more deemed more accurate than actually going to the polls.

We should insist that Australia keeps the People’s Olympics.  They should be held every five years too.   For mine they are one government expense worth their weight in gold.  Well silver maybe.

New housing constraints

This week I have looked at the perceived constraints on new housing development.

I have used the information from the NAB quarterly residential property surveys – and with some estimates on my part – have compared the survey results between mid 2019 and mid 2021.

Between 350 and 370 property industry panellists participated in each residential survey.

I have included three tables in this post.

Table 1 shows the constraints on new housing development have increased over the past two years.

Please note that the higher the number in table 1 the larger the perception of constraint; with scores ranging from 0 (no or limited constraint) to 100 (highly constrained).

Table 2 suggests that the bigger increase in new housing constraints have been felt in Western Australia, South Australia and then Victoria.  It isn’t a coincidence, in my mind, that these states had the largest uptake of HomeBuilder applications when viewed on per capita basis.

Table 3 indicates that the biggest change in constraints has been in the labour market, site availability and construction costs, all of which have been influenced by a rapid rise in demand brought about by HomeBuilder and to a lesser extent a relaxation in credit compliance.

End note

HomeBuilder was a successful programme, it helped lift housing demand when that demand should have been falling, due to restrictions on immigration.

But such government incentives distort the building cycle, often leading to a boom-bust scenario.  Domestic demand has been brought forward and in coming years we have likely to see a contraction in new housing starts.  How large that reduction is depends on when, and by how much, overseas migration returns and if any further construction incentives are offered in the lead up to the federal election.

A noisy wheel gets the most grease and the housing industry and associated businesses have a big microphone, so I expect it will be back to Big Australia and more building related handouts sometime in 2022.

Bread and Circuses

If you are hooked on the 2032 Brisbane/SEQ Olympic palaver, then maybe quit reading now whilst you are ahead.

For those that don’t easily swallow the bunkum, read on.


My headline comments

For mine such major sporting events are an absolute waste of money.

The 2032 Olympic Games is also very, very unlikely to leave a lasting legacy.

And the next ten years of Olympics-related development – Queensland’s so called Golden Decade (oh Lord please give me a break!) – doubtfully will deliver anything special; let alone supply what is really needed; nor should it lead to above average Brisbane centric asset growth.

Why?  Because such past events like this hardly ever do.

Some statistics

But wait just a minute, there is a report which says that the estimated economic and social benefits of the 2032 Games is projected to around $8 billion for Queensland and $18 billion for Australia.

Yes, there is such as report but did you know that this impact is based over 20 years – between 2022 and 2042 – and more than half of this illusionary $18 billion figure is for things like civic pride, better health due to exercise, self-improvement from volunteering and even ‘retained expenditure’, in this case, the assumption that Aussies around 2032 won’t travel overseas but will stay home to attend the Games.

I kid you not.

Past studies have found that there was only a moderate increase in adult sport participation post a Summer Olympics – and that this didn’t last long – and when it comes to the winter event, and also Commonwealth Games, there was no evidence that the event boosted adult sports participation in the area that hosted the sports event.

We also now have the politicians telling us that the Brisbane Games will create around 120,000 new jobs.  Well, that figure is also over 20 years, and sounds less impressive when you consider that by 2042, Australia is likely to have an extra six million more people employed than now.

A 2% potential job impact doesn’t have the same ring to it does it?

Talk about hyperbole!

But wait there is more.

And just like every other urban region that has invested heavily in hosting a major sporting event or its equivalent over the last couple of decades, this event will most certainly lose money.  Probably a lot of money and much more money than most realise.

A review of the 19 past Olympic Games, covering both the summer and winter events and stretching from Grenoble in 1968 to Rio de Janeiro in 2016 found that the average cost overrun was in the tune of 120%.

The Sydney 2000 Summer Olympics saw a cost overrun of 90%.  Furthermore, the Sydney event – which was fun to watch and no doubt a positive experience for those that were involved – generated about a $2.1 billion loss in real terms.

That’s a very expensive two week holiday if you ask me.

With such a poor batting average it is very unlikely that Brisbane will hit the ball out of the park.  In fact, based on past evidence Brisbane is very likely to eclipse the 120% average and by a long shot.

My two bobs worth

Moreover, I think that we – being the ‘West’ and especially, Australia, of late – have now reached a stage where the quote “Give them bread and circuses and they will never revolt” by Roman poet Juvenal, applies.

During the last stages of the Roman Empire, the government kept the Roman populace happy by distributing free food and staging huge spectacles such as gladiator contests in the Colosseum.

In the modern political context, the phrase means to generate public approval, not by excellence in public service or practical policy, but by diversion, distraction or by satisfying the most immediate or base requirements of a populace — by offering a palliative: for example, food (bread) or entertainment (circuses).

Replace ‘food’ with welfare; subsidies; wokeness; even artificially low interest settings and you get the drift.

We are now so hooked on this stuff.  We were once a stoic brunch.  Not anymore.

Imagine if the Olympic monies (and importantly the time and effort) was spent on things that would really make a difference to the city and its local residents.

Some suggestions include:

And whilst outside of my purview, our education, taxation and even health systems need a major overhaul.

The real lesson here

Yet despite volumes of documented evidence to the contrary why do cities and nations keep pitching for these things?

There are several reasons why.

  • Powerful people will benefit.  High profile projects attract vendors, businesses and politicians that seek high profile outcomes.
  • The project is specific.  Are there other ways that Brisbane/SEQ could effectively invested the money? Revisit my short list above and the answer is yes, without a doubt.  But there’s an infinite number of alternatives – with numerous agendas and many vested interests – versus just one specific goal.
  • The project has a rigid timeframe.  It’s imminent. You can’t study it for years or a decade and come back to it.  You are either in or out.  It’s yes or no.
  • The end is in sight. When you build a stadium, you get a stadium.  When you host the Games, you get the Olympics.  That’s rarely true for the more important (but less visually urgent) alternatives, such as actually making the city better.
  • Patriotism’s at work. “What do you mean you don’t support the city?”

As I wrote a few years back, the big takeaway here is to understand that an economic argument as to why the hosting of the Olympics shouldn’t happen is a waste of time.

It won’t change the decision maker’s minds.  It will get no purchase with the masses.  The media might run a few stories about the counterpoint but only really to be seen as offering a balanced view.

But we can learn a lot as to why such campaigns get traction and succeed.

Enough said.  I won’t waste anymore of your time.