Biggest impacts

According to a new release by the ABS, half (54%) of the Australian population think that things will return back to normal within six months.  The result was 51% in Victoria.  Only one in ten (11%) think that things will never return to what they were like before COVID19.

As that survey was a few weeks back, I wonder if we are that optimistic now.

Another survey, this one an established and, for mine, a more trusted poll shows that most of us think that the economy will remain in a poor state for the next 12 months.  Yet this ANZ-Roy Morgan Consumer Confidence sampling suggests that very few think things will remain economically constrained in five years’ time.

So, things look very rough now, but most still believe conditions will improve in the future.  I too think this shall pass.  But when, and under what conditions, have always been important questions.

But for now, it remains hard, especially if you live in Victoria.  I have had to endure a travel related 14-day lockdown over the last two weeks.  It wasn’t a bed of roses.  But it’s all thorns if you have to ensure six-plus weeks of hard isolation.

In my recent Master Class I outlined the issues that experienced property industry practitioners anticipate will have the biggest impacts on the housing market over the next 12 months.  It started quite a debate.

This quarterly survey of 370 individuals by NAB allows for multiple responses and their June quarter poll found:

  • 80% believe that rising unemployment and job uncertainty will have the biggest short-term impact on the housing market, followed by
  • 76% said lower consumer confidence,
  • 60% difficulty in buyers (and developers) getting finance,
  • 60% the end (and tampering off) of JobKeeper and JobSeeker payments,
  • 48% lower migration,
  • 20% increased supply of rental as short-term rentals enter the long-term market,
  • 19% increased demand for regional living including lifestyle, sea change and tree change choices,
  • 18% downward pressure on construction activity from lower demand, and
  • 17% reduced demand for apartments and inner city dwelling due to increased working from home.

It is interesting what the housing industry thinks will have the most impact and which issues they consider to be less serious.

I would have placed ‘difficulties accessing finance’, ‘lower migration’ and ‘downward pressure on construction activity’ higher up my list.

And whilst I do think this impact will be a relatively short-term one in terms of its current volumes – and more concentrated on older households over the medium to long-term – many ‘lifestyle’ regions, aren’t ready for the influx and its potential impact.

In these lifestyle locations properties are currently selling within weeks, many via video inspections and almost all are being bought by eastern seaboard capital city buyers.

13

The third post of our three part series on SEQ urban land development.

This week I look at new land development supply in more detail.

Another three tables this week.

Table 1: Major SEQ municipalities: Total urban residential allotment approvals

Years ending

March

Municipalities
Sunshine Coast Moreton Bay Brisbane Redland
2016 2,513 6,371 2,639 458
2017 2,727 6,039 2,789 355
2018 1,361 3,585 2,797 660
2019 2,242 1,690 2,908 423
2020 890 1,592 2,230 548
Years ending

March

Logan Ipswich Gold

Coast

SEQld
2016 3,475 3,315 2,189 20,960
2017 3,235 3,651 2,412 21,208
2018 5,418 2,598 2,165 18,584
2019 3,206 2,565 1,202 14,236
2020 4,960 1,205 279 11,704
Matusik + Queensland Government.  Total urban residential allotment approvals between 60m2 to <2,500m2 on a standard format plan intended for detached dwellings.

Table 2: Major SEQ municipalities: Total approved urban residential projects

Years ending

March

Municipalities
Sunshine Coast Moreton Bay Brisbane Redland
2016 79 187 532 89
2017 79 180 535 85
2018 92 144 560 65
2019 78 145 475 79
2020 64 101 471 69
Years ending

March

Logan Ipswich Gold

Coast

SEQld
2016 139 83 117 1,226
2017 160 76 127 1,242
2018 144 92 108 1,205
2019 120 79 103 1,079
2020 77 59 80 921
Matusik + Queensland Government.  Total approved urban residential projects to supply new allotments between 60m2 to <2,500m2 on a standard format plan intended for detached dwellings.

Tables 1 and 2 tell me:  That new land development approvals have fallen substantially across SEQ over the last five years.  The fall in new future land supply is most marked in several municipalities including the Gold Coast, Sunshine Coast, Moreton Bay and Ipswich.

There has been a fall in the number of new approved projects in Logan.

Table 1 outlines total residential allotment approvals whilst table 2 shows that number of new approved land projects.

Table 3: Major SEQ municipalities: Development approvals by size

Municipality Total approved allotments Total development projects
< 10 lots 11-50 lots > 50 lots < 10 lots 11-50 lots > 50 lots
Number of allotments + number of projects
Sunshine Coast 105 157 628 48 8 7
Moreton Bay 199 481 912 77 13 9
Brisbane 663 1,377 190 413 38 3
Redland 104 128 316 61 2 3
Logan 141 75 4,744 55 5 17
Ipswich 93 240 872 43 11 5
Gold Coast 120 159 0 76 4 0
South East Qld 1,425 2,617 7,662 773 81 44
% distribution
Sunshine Coast 12% 18% 70% 77% 13% 10%
Moreton Bay 13% 30% 57% 76% 15% 9%
Brisbane 30% 62% 8% 88% 11% 1%
Redland 19% 23% 58% 89% 7% 4%
Logan 2% 2% 96% 71% 7% 22%
Ipswich 8% 20% 72% 73% 19% 8%
Gold Coast 43% 57% 0% 95% 5% 0%
South East Qld 12% 22% 66% 86% 9% 5%
Matusik + Queensland Government.  Total urban residential allotment approvals between 60m2 to <2,500m2 on a standard format plan intended for detached dwellings. Year ending March 2020.

Table 3 tells me:  That most of the new land projects across SEQ are now small developments, with 86% holding under 10 allotments.  These smaller projects, however, hold just 12% of the total approved allotments.

Most new land – some 66% – is held in larger new projects, holding over 50 allotments apiece.  However, there were just 44 ‘large’ projects approved across SEQ over the last 12 months.

The average size of a new land estate across SEQ is now just 13 allotments!

Three shorts

Round two of our three part series on SEQ urban land development.

This week I look at demand and supply.

Three tables this week.

Table 1: Major SEQ municipalities: Urban land demand v supply #1

Municipality Allotment demand* Allotment

supply #1

Supply status

in years

Sunshine Coast 1,668 3,662 2.2
Moreton Bay 2,076 3,162 1.5
Brisbane 2,558 1,792 0.7
Redland 593 553 0.9
Logan 1,574 5,585 3.5
Ipswich 2,048 6,253 3.1
Gold Coast 2,175 1,402 0.6
South East Qld 12,692 22,409 1.8
Matusik + Queensland Government.  * Average annual urban residential allotment registrations over the last five years – see table 6.  Supply #1, uncertified lots with operational works approval.

Table 1 tells me:  That there is under two years of actual potential new land supply across SEQ and the supply is tightest on the Gold Coast, Brisbane and in Redland.

This supply is way too short!

Table 2: Major SEQ municipalities: Urban allotment demand v supply #2

Municipality Allotment demand* Allotment

supply #2

Supply status

in years

Sunshine Coast 1,668 5,319 3.2
Moreton Bay 2,076 10,018 4.8
Brisbane 2,558 6,641 2.6
Redland 593 1,292 2.2
Logan 1,574 12,984 8.2
Ipswich 2,048 13,900 6.8
Gold Coast 2,175 4,197 1.9
South East Qld 12,692 54,351 4.3
Matusik + Queensland Government.  * Average annual urban residential allotment registrations over the last five years – see table 6.  Supply #2, total allotments approved yet not developed.

Table 2 tells me:  That when factoring in the total approved urban subdividable land across SEQ – being 54,350 allotments – this supply equates to just over 4 years supply.

Total approved allotment supply remains tight on the Gold Coast, Redland and Brisbane.  Logan and Ipswich have more potential supply.

And again, this supply is too short! 

Table 3: Major SEQ municipalities: Urban allotment demand v supply #3

Municipality Supply #2 status

in years

Supply #3 Total supply status in years
Allotment demand* Allotment

supply

Supply status in years
Sunshine Coast 3.2 1,668 994 0.6 3.8
Moreton Bay 4.8 2,076 3,970 1.9 6.7
Brisbane 2.6 2,558 2,596 1.0 3.6
Redland 2.2 593 827 1.4 3.6
Logan 8.2 1,574 12,917 8.2 16.4
Ipswich 6.8 2,048 8,535 4.2 11.0
Gold Coast 1.9 2,175 4,265 2.0 3.9
South East Qld 4.3 12,692 34,104 2.7 7.0
Matusik + Queensland Government.  * Average annual urban residential allotment registrations over the last five years – see table 6. Supply #3, new urban residential supply over the next five years.

Table 3 tells me:  That the 34,100 new allotments expected to be ready for development over the next five years equates to just 2.7 years of demand.

When factoring in the current potential land supply (54,350 allotments) with these possible 34,100 additional allotments, sees an undersupply of urban subdividable land on the Brisbane and Redland (3.6 years supply), on Sunshine Coast (3.8 years) and on the Gold Coast too (3.9 years).

Even Moreton Bay with 6.7 years allotment supply, just has enough future stock.

This leaves Ipswich and Logan as the only two major SEQ corridors with adequate land supplies.

The third short in a row!

End comment

Facing such limitations one would think that it was high time to open up more land; rethink existing constraints; decentralise the state government workforce; reverse the townhouse development ban in Brisbane City Council and generally encourage middle-ring and suburban infill development including backyard housing solutions.

Land Ahoy!

The HomeBuilder package has helped generate a lot more buyer inquiry for vacant land and new house/land packages.

The month of June was said to be hectic.  It is likely that the interest will remain high for the rest of calendar 2020 as well.

What is yet to be seen is if the inquiry and associated holding deposits turn into contracts.

I suspect that there will be a high fallout rate as lenders look hard to each borrower’s employment status, future earning capacity, lifestyle spending and debt profile.

That said, this week is the first post of a south east Queensland land market trilogy.

My last three part series on jobs was quite popular.  So here we go again.

Two tables this week.

Table 1 looks at the suburban distribution of new land development across SEQ and table 2 looks at suburban vacant land and house/land prices and sales.

Table 1: Major SEQ municipalities: Urban allotment development distribution

Municipality + suburb Total lot registrations* Market share
Municipality SEQld
Sunshine Coast
Caloundra West 699 47% 6%
Landsborough 285 19% 3%
Nambour 139 9% 1%
Total 1,123 75% 10%
Moreton Bay
Scarborough-Newport 364 17% 3%
Murrumba Downs-Griffin 231 11% 2%
North Lakes-Mango Hill 208 10% 2%
Caboolture South 162 8% 1%
Rothwell-Kippa Ring 118 6% 1%
Morayfield East 116 6% 1%
Bribie Island 101 5% 1%
Burpengary 100 5% 1%
Total 1,400 67% 13%
Brisbane
Pallara-Willawong 473 19% 4%
Rochedale-Burbank 202 8% 2%
Upper Kedron-Ferny Grove 140 6% 1%
Forest Lake-Doolandella 126 5% 1%
Wynnum West-Hemmant 125 5% 1%
Total 1,066 43% 10%
Redland
Thornlands 235 55% 2%
Logan
Boronia Heights-Park Ridge 827 42% 8%
Wolffdene-Bahrs Scrub 346 17% 3%
Chambers Flat-Logan Reserve 224 11% 2%
Edens Landing-Holmview 154 8% 1%
Total 1,551 78% 14%
Ipswich
Ripley 543 40% 5%
Collingwood Park-Redbank 176 13% 2%
Redbank Plains 164 12% 1%
Bellbird Park-Brookwater 125 9% 1%
Springfield 109 8% 1%
Total 1,117 83% 10%
Gold Coast
Pimpama 422 35% 4%
Coomera 299 25% 3%
Ormeau-Yatala 139 12% 1%
Oxenford-Maudsland 104 9% 1%
Total 964 81% 9%
Total SEQld 7,456 68%
Matusik + Queensland Government.  * Urban residential allotment registrations between 60m2 to <2,500m2 on a standard format plan intended for detached dwellings.  Year ending March 2020.

Table 2: Major SEQ municipalities: House + land package & vacant land sales

Municipality + suburb House + land package sales Vacant land sales
No $ No $ $/m2
Sunshine Coast
Caloundra West 103 $585,500 253 $247,750 $691
Landsborough 12 $465,000 201 $269,500 $732
Nambour 20 $499,000 122 $250,000 $381
Moreton Bay
Scarborough-Newport 28 $615,500 155 $334,000 $897
Murrumba Downs-Griffin 22 $539,000 167 $285,000 $732
North Lakes-Mango Hill 31 $525,000 160 $292,500 $760
Caboolture South 11 $320,000 74 $204,000 $428
Rothwell-Kippa Ring 8 n.a. 34 $231,000 $769
Morayfield East 7 n.a. 168 $185,000 $485
Bribie Island 5 n.a. 125 $336,000 $575
Burpengary 15 $451,400 83 $239,500 $628
Brisbane
Pallara-Willawong 65 $570,000 241 $305,000 $775
Rochedale-Burbank 25 $1,058,000 234 $470,000 $1,145
Upper Kedron-Ferny Grove 6 n.a. 63 $410,000 $874
Forest Lake-Doolandella 8 n.a. 83 $270,000 $794
Wynnum West-Hemmant 4 n.a. 54 $399,000 $886
Redland
Thornlands 10 $525,000 107 $320,000 $744
Logan
Boronia Heights-Park Ridge 92 $453,500 325 $232,500 $544
Wolffdene-Bahrs Scrub 17 $471,750 210 $221,000 $541
Chambers Flat-Logan Reserve 28 $450,000 180 $215,000 $546
Edens Landing-Holmview 10 $462,500 79 $229,000 $558
Ipswich
Ripley 80 $420,000 340 $205,500 $525
Collingwood Park-Redbank 8 n.a. 132 $188,000 $398
Redbank Plains 12 $367,500 31 $192,000 $456
Bellbird Park-Brookwater 14 $489,000 129 $245,000 $593
Springfield 1 n.a. 17 $275,750 $655
Gold Coast
Pimpama 71 $513,000 341 $271,000 $640
Coomera 12 $610,000 246 $285,000 $678
Ormeau-Yatala 4 n.a. 113 $255,000 $606
Oxenford-Maudsland 6 n.a. 91 $297,500 $450
Matusik, Price Finder + Queensland Government.  Matusik estimates.  A new house and land package are defined as a detached house dwelling on a newly registered block of land between 140m2 and 2,500m2.  Vacant urban land sold between 140m2 and 2,500m2.  Year ending March 2020.

Matusik, Price Finder + Queensland Government.  Matusik estimates.  A new house and land package are defined as a detached house dwelling on a newly registered block of land between 140m2 and 2,500m2.  Vacant urban land sold between 140m2 and 2,500m2.  Year ending March 2020.

Comments

Table 1 tells me: that just under 70% of the new urban allotment registrations across SEQ are held in just 30 suburbs (SLA2 ABS definitions).  There are some 320 such SLA2 areas across SEQ.

These suburbs also dominate land development within their respective municipal areas.  That market share ranges from 43% in Brisbane to 83% in Ipswich.

New land subdivision activity across SEQ is now limited to a few development corridors.

Table 2 shows: that there is a wide range of price points across the SEQ land market with the most expensive land on a $/m2 basis selling in Rochedale in Brisbane.

Yet vacant land can still be bought for under $500/m2 in several outer SEQ suburbs including Nambour, Caboolture West, Morayfield East, Collingwood-Redbank, Redbank Plains and Bellbird Park.

Upfront or later?

Introduction

COVID19 and the Australian financial assistance packages – in particular JobKeeper and HomeBuilder – have sparked quite a bit of commentary about better planned local communities and what ingredients make better new suburban subdivisions.

I like to think we are a bit ahead of the curve and over recent years my firm has undertaken various investigations into the benefits of advanced community infrastructure rollouts in new housing estates.

Below is a precis of our general findings.

Background

Most experienced land developers will sell to as many markets as possible – i.e. spec-builders, owner residents and investors – and will also try and keep their marketing programmes as local as possible.

The better land developers also limit the amount of investment selling in their estates.

Often the investment limit is between 20% and 30%.

Local sales are much cheaper than sales made further away.

Sales to owner residents are also much cheaper than investment selling.

The marketing and sales costs for a local owner resident sale is often pegged at 3% to 5% of the land price, whilst interstate/overseas marketing and sale costs can exceed 10%.

These costs are passed onto the end buyer, reducing housing affordability.

Owner residents are also more cautious buyers, wanting to see at least some of the estate, before they purchase, whilst in many cases investors – and especially those living some distance from the estate itself – elect to be ‘early adaptors’, buying in the initial land releases in anticipation of land prices rising as the estate progresses.

Early community infrastructure is often recreational spaces, although some developers  provide amenities such as cafes for local residents, at an early stage of the estate’s development.

However, recreational spaces generally need to be more than just a park; equipment should be provided to encourage sporting pursuits and local community engagement, via children play equipment, BBQs and shaded seating arrangements, street art and signage pointing out local things of interest and as focal point for new residents in the estate.

Importantly, the provision of a ‘standard’ park – largely being just grass – isn’t enough to qualify as community infrastructure.  The community infrastructure needs to allow for a range of activities including cultural, educational, recreational and sporting pursuits.

Such estates have a high local amenity.

Some key findings

More local sales

In brief, such early facilities help a developer demonstrate the quality of the estate which then has higher appeal to owner residents and local buyers, including investors.

A recent review of nine major land estates across south east Queensland found that those estates which don’tprovide early community infrastructure rely heavily on interstate marketing and sold close to half (45% on average) their stock to investors.

We also found that investor interest in estates with high local amenity is still there, but at a much more sustainable level, averaging 24% across the relevant land estates investigated.

Fewer rental moves and resale turnover

There is a strong trend towards higher rental and resale turnover in land estates without upfront community infrastructure.

On average some 38% of rental households across the Brisbane region change residence each year.

Also, a detached house resells, again on average, every nine years.  The sales turnover is less for owner-residential abodes, averaging close to 15 years, whilst for typical housing investment housing stock, the average time between resales is seven years.

When it comes to renters the rate of annual tenant turnover exceeds 70% in those new land estates with none or very limited community infrastructure.

Our work also found that a third of the new homes in such estates with limited local amenity where resold or on the market for resale within three years of the original developer or builder sale.

End note

Whilst the provision of such facilities costs the developer, this cost is often less than paying higher marketing and sales commissions to secure non-local sales and investment transactions.

However, despite such evidence, some developers have an ‘investment’ sales model and rely heavily on investment selling.

The provision of early facilities or any facilities at all, in their minds, is a waste of money and hence they are reluctant to provide such in their estates.

Shovel ready?

Shovel ready projects is the latest government catchcry.

Of late most of these shovel-ready projects involve new civic construction.

There are two basic types of construction: civic construction (roads, rail, utilities, etc.) or building construction (private dwellings, schools, hospitals, offices, factories, social housing, etc).

When it comes to building construction there are two basic types – residential construction and commercial or ‘non-residential’ activity.

The two charts below show the amount of construction work approved but yet started across Australia.

Chart 1 shows that building work yet to commence totals $100 billion, compared to $47 billion work of yet started civic work, whilst chart 2 shows that waiting home building totals $68 billion compared to $33 billion worth of lingering commercial building works.

So, in short, the amount of anticipated building construction is twice as large as the potential civic work and the awaited home building is double the size of the commercial building work waiting in the wings.

One would think that the main aim of any COVID19 construction-related stimulus is to help with employment.

Building accounts for the lion’s share of the construction industry’s employment, while the civic sector has a much smaller labour force.

There are around seven builder tradies for every one civic construction worker in Australia, so a dollar spent on civil works creates far fewer jobs than a dollar spent on building.

Yet the government is focusing on civic projects not building construction.

Also, building activity was already falling prior to the pandemic, suggesting that there was surplus capacity already developing among builders even before COVID19 hit our shores.

As well, building activity is almost entirely privately funded, so it is far more sensitive to a recession than the public sector.

This makes a pretty strong case for favouring the building sector with any construction specific inducements.

We should be stimulating the whole building industry and not just new house and land packages or top end renovations for a quick six-month boost as per the HomeBuilder package.

We need a more evenly spread building package – covering all building types and geographic locations – plus one that covers several years not just months.

Moreover, stimulating via the civic segment may actually do more harm than good as this sector is already operating close to capacity.  Pumping more money into any industry that is operating close to full capacity will create labour shortages and inflate prices.

Some think this focus on new civic work will create much-needed employment for workers displaced from other industries.  This should be a concern.  Reallocating workers between sectors as a short-term fix can create long-term problems.

The mining boom was a classic example.  Workers were diverted into a boom that was temporary.  When the bust came, many of those workers found it very hard to relocate back to their previous work.  A decade later and many of these workers still remain underemployed.  Some are even unemployed.

Another aim of any government stimulus should be to preserve workers’ attachment to their pre-COVID19 occupations wherever possible.

That’s why JobKeeper was designed as a business subsidy and one of the biggest recipients of JobKeeper has been the building industry.

Shovel ready?  I do wonder.

I am grateful to Robert Sobyra, Director, Research & Digital at Construction Skills Queensland for this words of wisdom in putting together this post.

…..

Furthermore, governments, more often than not, build the wrong infrastructure i.e. Cross River Rail rather than new bridges crossing the Brisbane River.  It speaks volumes when the top ten infrastructure projects in Queensland are all located in, or converge on, inner Brisbane.

Yet it pays to understand why such things keep happening.  You may have also missed my thoughts on why I think Brisbane needs more bridges.

Future work – Part 3

As noted last week, this is the third post of three about the potential future shape of new jobs.

The same caveats apply as noted in my last two posts.

This post I have covered two topics – construction jobs and the proposed future distribution of new jobs by small area (SA4) in Sydney, Melbourne, Perth and Adelaide.

Go here to revisit the distribution of new jobs in south east Queensland.

Remember, to work out the SA4 regional boundaries, click here, and select 2016 Statistical Area Level 4 (SA4) in the ‘Choose a boundary type’ area and off you go.

Construction jobs

HomeBuilder has been released because the government knows that new construction activity is a major economic driver and employer.

I think that this scheme misses the mark, but enough has been said by me and others in this space.  Except to say that why backyard homes or granny flats are excluded from this package escapes me.  Such new builds go a long way to providing sensible and affordable accommodation.

Australia’s residential construction sector has weighed in estimating that new housing boosts the nation’s GDP by about 5% per year and directly employs some 134,000 people.

A recent report from the National Housing Finance & Investment Corporation has stated that every $1m spend on residential construction supports 9 jobs and about $2.9m of industry output and consumption across the economy.

I do think this multiplier is too high, as our work, based on the Queensland state govt housing strategy, found since 2018, 312 new dwellings have been created and 1,307 jobs supported, which suggest 4 jobs per new dwelling.

The overall package – a five year programme – is expected to delivery 4,000 new homes and 1,800 new jobs = 2.3 new jobs per home.

I think the latter is a more applicable multiplier.

Table 1 below is a long one and shows those areas across Australia most (and least) dependent on new construction jobs.

Table 1: Forecast construction job growth over next five years

SA4 Region Location New jobs
Construction Total jobs %
Moreton Bay Brisbane 3,094 12,539 59%
East Brisbane 2,151 7,078 30%
South East Tas 186 618 30%
Coffs Harbour – Grafton NSW 979 3,899 25%
Richmond – Tweed NSW 2,334 9,395 25%
Hunter Valley NSW 2,597 10,573 25%
Outback (North and South) WA 737 3,097 24%
Ipswich Brisbane 4,465 19,194 23%
Far West and Orana NSW 571 2,518 23%
Logan – Beaudesert Brisbane 2,619 11,681 22%
North Adelaide 3,272 14,685 22%
Warrnambool + South West Vic 395 1,782 22%
Geelong Vic 2,364 11,502 21%
Bunbury WA 935 4,796 19%
Wheat Belt WA 602 3,095 19%
New England + North West NSW 832 4,285 19%
Mornington Peninsula Melbourne 1,765 9,266 19%
South West Sydney 2,918 15,469 19%
Outer South West Sydney 1,880 10,131 19%
Bendigo Vic 1,316 7,250 18%
South East Melbourne 8,856 49,396 18%
Launceston + North East Tas 678 4,131 16%
North East Melbourne 5,087 31,816 16%
West Adelaide 1,077 7,009 15%
Hobart Tas 1,171 7,767 15%
Parramatta Sydney 4,237 28,186 15%
South Adelaide 1,846 12,780 14%
Hume Vic 608 4,217 14%
Inner Perth 869 6,172 14%
Illawarra NSW 1,538 11,502 13%
Inner South West Sydney 4,711 35,406 13%
Latrobe – Gippsland Vic 995 7,546 13%
Canberra ACT 1,802 13,994 13%
Barossa – Yorke – Mid North SA 177 1,382 13%
North West Vic 328 2,645 12%
Outer East Melbourne 3,012 24,652 12%
Baulkham Hills + Hawkesbury Sydney 1,435 11,782 12%
West and North West Tas 199 1,666 12%
North West Melbourne 2,388 20,420 12%
Newcastle + Lake Macquarie NSW 2,324 21,082 11%
Outer West + Blue Mountains Sydney 1,467 13,329 11%
Australia  113,662 1,075,045 11%
Central + Hills Adelaide 838 8,716 10%
Central Coast Sydney 1,156 12,610 9%
Darling Downs – Maranoa Qld 254 2,812 9%
Gold Coast Qld 4,218 47,258 9%
Blacktown Sydney 1,701 19,317 9%
Inner Melbourne 4,096 47,846 9%
Northern Beaches Sydney 896 11,126 8%
Riverina NSW 471 6,094 8%
Shepparton Vic 340 4,648 7%
Cairns Qld 689 9,569 7%
Central West NSW 425 6,208 7%
West Melbourne 3,946 58,301 7%
North Sydney + Hornsby Sydney 1,552 23,236 7%
North Brisbane 620 9,476 7%
Sunshine Coast Qld 1,395 21,577 6%
West Brisbane 372 5,765 6%
Inner East Melbourne 911 14,414 6%
South Brisbane 997 16,689 6%
Ballarat Vic 252 4,293 6%
City + Inner South Sydney 1,844 32,333 6%
Inner West Sydney 1,032 19,486 5%
Ryde Sydney 420 8,148 5%
Inner City Brisbane 909 18,845 5%
Inner South Melbourne 1,377 29,915 5%
Eastern Suburbs Sydney 830 18,334 5%
Mandurah Perth 103 2,327 4%
Mid North Coast NSW 258 6,179 4%
South West Perth 656 16,851 4%
South East Perth 471 13,032 4%
Capital Region NSW 276 8,230 3%
Sutherland Sydney 321 10,760 3%
Darwin NT 140 5,067 3%
Murray NSW 64 3,992 2%
Southern Highlands – Shoalhaven NSW 46 4,349 1%
South Australia – South East SA 36 3,594 1%
Mackay – Isaac – Whitsunday Qld 24 8,178 0%
Toowoomba Qld 8 5,783 0%
Outback SA 0 1,061 0%
North West Perth -331 23,568 -1%
North East Perth -123 8,094 -2%
Townsville Qld -94 4,971 -2%
Outback Qld -42 1,724 -2%
Central Queensland Qld -191 6,569 -3%
Outback NT -67 1,974 -3%
Wide Bay Qld -250 1,995 -13%
Matusik + lmip.gov.au.  Employment projections for five years to May 2024.

New jobs distribution by capital cities

Four tables follow.

Again, to revisit south east Queensland’s future job spread go here.

Table 2: Forecast job growth over next five years within Sydney

Sydney region Number of new jobs % Sydney
Central Coast 12,600 5%
Baulkham Hills and Hawkesbury 11,800 4%
Blacktown 19,300 7%
City and Inner South 32,300 12%
Eastern Suburbs 18,300 7%
Inner South West 35,400 13%
Inner West 19,500 7%
North Sydney and Hornsby 23,200 9%
Northern Beaches 11,100 4%
Outer South West 10,100 4%
Outer West and Blue Mountains 13,300 5%
Parramatta 28,200 10%
Ryde 8,100 3%
South West 15,500 6%
Sutherland 10,800 4%
Sydney region 269,500 100%
Matusik + lmip.gov.au.  Employment projections for five years to May 2024.

Table 3: Forecast job growth over next five years within Melbourne

Melbourne region Number of new jobs % Sydney
Inner 47,800 17%
Inner East 14,400 5%
Inner South 29,900 11%
North East 31,800 11%
North West 20,400 7%
Outer East 24,700 9%
South East 43,400 16%
West 58,300 21%
Mornington Peninsula 9,300 3%
Melbourne region 280,000 100%
Matusik + lmip.gov.au.  Employment projections for five years to May 2024.

Table 4: Forecast job growth over next five years within Perth

Perth region Number of new jobs % Sydney
Mandurah 2,300 3%
Inner 6,200 9%
North East 8,100 12%
North West 23,600 33%
South East 13,000 19%
South West 16,800 24%
Perth region 70,000 100%
Matusik + lmip.gov.au.  Employment projections for five years to May 2024.

Table 5: Forecast job growth over next five years within Adelaide

Adelaide region Number of new jobs % Sydney
Central and Hills 8,700 20%
North 14,700 34%
South 12,800 30%
West 7,000 16%
Adelaide region 43,200 100%
Matusik + lmip.gov.au.  Employment projections for five years to May 2024.

These tables tell me: that Melbourne is expected to create more new jobs than Sydney over the next five years.

Also, most new jobs – around 90% – when including SEQld, Canberra and Newcastle/Wollongong – are expected to be held in our six largest urban areas.

In addition, some 70% of these new jobs are in suburban locations.

Yet many of the new big-ticket infrastructure projects being fast-tracked across the country are situated in, or focused on, inner city locations.

Future work – Part 2

As noted last week, this is the second post of three about the potential future shape of new jobs.

The same caveats apply as noted last week too.

I have combined the originally planned second and third job Missive posts together in this communique.

Several have asked me if I would post the proposed future distribution of new jobs by small area (SA4) in Australia’s major urban areas.  This information will be posted next week and will close out this Missive job series.

Three tables follow.

Table 1: Average individual annual total earnings by industry type

Industry type Average annual total earnings
Higher paying jobs
Mining $137,500
Utility services $100,250
Financial/Insurance services $90,250
Media/Telecommunications $86,250
Professional/Scientific services $86,000
Transport/Warehousing $83,250
Middle paying jobs
Construction $82,250
Public administration $82,000
Wholesale trade $72,000
Manufacturing $70,250
Education $64,500
Real Estate $62,500
Lower paying jobs
Health care $59,000
Private administration $55,000
Other services $49,250
Arts + recreation $44,500
Retail trade $42,250
Agriculture $37,500
Tourism $30,000
Average $65,500
Matusik + ABS 6302.0.  Total average individual annual total earnings as at November 2019.

Table 1 tells me: that the highest paying job in Australia involves working in the mining industry, whilst the lowest paid work is serving tourists.  As a side bar here is that there is something wrong when our teachers and medical staff get around half the brass paid to folks working in mineral resources.

Table 2: Forecast job growth over next five years by capital city + industry type

Industry type Number of new jobs % Capitals
Higher paying jobs
Mining 10,800 1%
Utility services 4,600 1%
Financial/Insurance services 16,900 2%
Media/Telecommunications -1,100 0%
Professional/Scientific services 154,700 19%
Transport/Warehousing 37,200 5%
Total higher paying jobs 223,100 28%
Middle earning jobs
Construction 84,900 11%
Public administration 37,000 5%
Wholesale trade 8,000 1%
Manufacturing -5,700 -1%
Education 89,400 11%
Real Estate 11,800 1%
Total middle paying jobs 225,400 28%
Lower earning jobs
Health care 158,200 20%
Private administration 27,100 3%
Other services 25,000 3%
Arts + recreation 21,600 3%
Retail trade 54,000 7%
Agriculture -1,300 0%
Tourism 64,000 8%
Total lower paying jobs 348,600 44%
Total capital cities 797,100 100%
Matusik + lmip.gov.au.  Employment projections for five years to May 2024.

Table 2 tells me: that some 44% of the new jobs created in our capital cities over the next five years are expected to be lower paying ones.  The share of expected higher and middle-income jobs are 28% each.  The top five capital city job growth types are health care, professional/scientific services, construction, education and tourism.

Table 3: Forecast job growth over next five years, regional Australia + industry type

Industry type Number of new jobs % Capitals
Higher paying jobs
Mining 4,600 2%
Utility services 2,200 1%
Financial/Insurance services 3,500 1%
Media/Telecommunications 500 0%
Professional/Scientific services 17,700 6%
Transport/Warehousing 6,600 2%
Total higher paying jobs 35,100 13%
Middle earning jobs
Construction 28,800 10%
Public administration 15,100 5%
Wholesale trade 2,500 1%
Manufacturing 2,300 1%
Education 39,900 14%
Real Estate 500 0%
Total middle paying jobs 89,100 32%
Lower earning jobs
Health care 94,400 34%
Private administration 7,700 3%
Other services 13,300 5%
Arts + recreation 5,100 2%
Retail trade 8,400 3%
Agriculture -2,600 -1%
Tourism 27,500 10%
Total lower paying jobs 153,800 55%
Total capital cities 278,000 100%
Matusik + lmip.gov.au.  Employment projections for five years to May 2024.

Table 3 tells me: that over half of the new work across regional Australia is expected to be in lower paying jobs.  The regions are expected to create limited new higher paying jobs.  The top five future job types include health care (with a high 34% of new regional jobs over the next five years), education, tourism, construction and professional/scientific services.

End comments

As noted last week there has been some commentary about more people moving out of the major capitals and living/working in regional centres.

If this eventuates it might see a change in regional employment types, but it would take wide-ranging economic reforms including decentralisation, overhaul of taxes, red tape, industrial relations and research and development incentives.

As they say, “pigs might fly”.

Yet, for mine, we will need such economic reform if we are to see a lift in the number of better paying jobs in the future. This applies to our capital cities as well.

Let’s hope that Reserve Bank of Australia governor Philip Lowe thought bubble about such reforms are taken seriously.

Nevertheless, the key finding here – again reiterating my thesis – is that future work in Australia (and for that matter across much of the western world) is lower paying jobs.  This changes the type of property people can afford; the way they live, travel to work and what they do in their leisure time.

For mine, new housing essentially takes two forms – small digs lodging individuals and couples near employment nodes and multiple families/unrelated people sharing accommodation in most other locales, including regional Australia.

Future work

A somewhat contentious post given recent events and COVID19’s potential impact on employment.

Last year the Australian Government’s released new five-year forecasts for employment via its Labour Market Information Portal.  Heavy caveats have subsequently been added to this dataset.

We have been using this information for some time and my regular review of the statistics have shown them to quite accurate.

So I have posted this information to your consideration and potential use.

I do think that what they suggest is still likely to come true.  More so the distribution of new jobs rather than the actual quantum as there will no doubt be changes to Australia’s job creation capability over the short-term given COVID19-related impacts and restrictions.

So maybe ignore the actual number of projected jobs and focus on the potential future distribution of new work.

Four tables follow.

Table 1: Forecast job growth over next five years by state and territory

State or territory Number of new jobs % Australia
New South Wales 368,000 34%
Victoria 330,000 30%
Queensland 212,000 20%
South Australia 49,000 5%
Western Australia 81,000 8%
Tasmania 14,000 1%
Northern Territory 7,000 1%
Australian Capital Territory 14,000 1%
Australia 1,075,000 100%
Capital Cities 797,000 74%
Regional Australia 278,000 26%
Matusik + lmip.gov.au.  Employment projections for five years to May 2024.

Table 1 tells me: that most new jobs with be created in the three major eastern states and three-quarters of this new work is expected to be in our capitals.

Table 2: Forecast job growth over next five years by capital city

Capital city Number of new jobs % Capitals
Sydney 270,000 33%
Melbourne 286,000 36%
Brisbane 101,000 13%
Adelaide 43,000 5%
Perth 70,000 9%
Hobart 8,000 1%
Darwin 5,000 1%
Canberra 14,000 2%
Capital Cities 797,000 100%
Matusik + lmip.gov.au.  Employment projections for five years to May 2024.

Table 2 tells me: that most of the new jobs in the capitals should be in Melbourne, Sydney and then Brisbane.

Table 3: Forecast job growth over next five years by major Australian region

Region State Number of new jobs % Regional Australia
Newcastle New South Wales 32,000 12%
Wollongong New South Wales 12,000 4%
Richmond-Tweed New South Wales 9,000 3%
Geelong Victoria 12,000 4%
Bendigo Victoria 7,000 3%
Ballarat Victoria 4,000 1%
Gold Coast Queensland 47,000 17%
Sunshine Coast Queensland 22,000 8%
Cairns Queensland 10,000 4%
Mackay Queensland 8,000 3%
Toowoomba Queensland 6,000 2%
Townsville Queensland 5,000 2%
Bunbury Western Australia 5,000 2%
Launceston Tasmania 4,000 1%
Regional Australia 278,000 100%
Matusik + lmip.gov.au.  Employment projections for five years to May 2024.

Table 3 tells me: that when it comes to new regional employment, the Gold Coast, Newcastle and the Sunshine Coast are expected to dominate.

Table 4: Forecast job growth over next five years within South East Queensland

SEQld region Number of new jobs % SEQld
Sunshine Coast 22,000 13%
Moreton Bay 13,000 8%
Brisbane north 10,000 6%
Inner Brisbane 19,000 11%
Brisbane East + Redland 7,000 4%
Brisbane south 17,000 10%
Brisbane west 6,000 3%
Ipswich 19,000 11%
Logan 12,000 7%
Gold Coast 47,000 27%
SEQld 172,000 100%
Matusik + lmip.gov.au.  Employment projections for five years to May 2024.

Table 4 tells me: that when it comes to new jobs across south-east Queensland, inner Brisbane’s share is expected to be just 11%, equal to Ipswich’s projected new job creation.  The Gold and Sunshine Coast are expected to create many more jobs as are the Brisbane suburbs, especially those in the south.

End comments

I think that little will actually change – assuming restrictions ease and no further major outbreaks occur – when it comes to our working environment.  Most – if not almost all – will snap back into their established pattern and distribution of work.

Adding weight to this argument is that nearly all of my recent work-related communiques focus on returning to pre-COVID19 behaviour.

Examples include: “When can we meet?” “Looking forward to the master class.”  “Can you give us a presentation?” “We want you to meet our board and present your findings.” “Your suggested workshopping your recommendations with recent buyers is a good idea, how do we implement this.”

There has been some commentary about more people moving out of the major capitals and living in regional centres.  This has been already happening when it comes to people downsizing or retiring, but it isn’t commonplace when it comes to the most working households.  Nor, for mine, is this going to change.

I think that actually fewer new jobs will be created in regional towns over the forecast five-year period as outlined in the tables in this post.  This will especially be the case if the coronavirus impact sees regional tertiary education facilities close; less overseas tourists and our fracas with China escalates limiting the economic viability of certain resource operations.

Forecasting what exactly?

On an almost daily basis there is another housing price growth forecast.  They range widely and, at present, mostly in the negative.  Some commentators have changed their tune, with one or two having done so within a month.

Almost all talk about ‘Australian’ house prices, a few break down their prognoses by capital city or region, but very few define what they are actually measuring.

Here is an example from the weekend papers:

“We still see Australia’s house prices falling, but now only -5 to -10 per cent.”

We know that the median is not the same as the average, but in describing a statistic, it also pays to differentiate between the median or average and a more relevant sample.

For example: The ‘median’ house price in Brisbane is $495,000, the ‘average’ price is $550,000 but a recently renovated four bedroom house on a 500m2 to 600m2 lot in Brisbane’s northern suburbs is currently selling for between $900,000 and $950,000.

The values in the first two sets are declining but in the third they are rising, as demand is high whilst supply of that property type is short in Brisbane.

The reason the numbers are different is that the samples are different.

We chop off the outliers in the third set.  This is really useful, because it enables us to be clear about what property or housing market segment we are talking about.

There are many housing market segments, some are doing it tough right now, others aren’t.

As suggested above how a housing market is preforming, more often than not, comes down to supply versus demand in the relevant subset or segment is question.

There is no national housing market, there is no capital city or regional town market neither.  There are really only subsets and they often differ substantially from each other.

It is best to clearly define which housing market segment you are looking at and start from there.  Ignore the generalisations and the talking heads that use such misleading parameters.

Sadly, in real estate, it is the easy things that get measured, and not the things that should.

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