By: Rosemary Johnston – Friday, November 13, 2015
According to Bernard Salt, “Only rich people can afford to live on Manhattan island and everyone else lives out in Brooklyn.” I Googled it and Brooklyn is only about 30minutes by subway from Manhattan. Not very far at all. Manhattan prices are sky high and only the wealthy can afford them, Brooklyn prices are more affordable for the average worker.
Sydney is well on the way to achieving the Brooklyn effect. The median price of houses up to 10km from the Sydney CBD is $1.6M; and the median price of houses in the middle ring, from 10 to 20km from the CBD, is $1.2M.John McGrath estimates that this means 90% of Australian’s can’t afford to live within 20km of the CBD of Sydney.They don’t earn enough money to service the loan without mortgage distress.At an 80% loan to value ratio, a 4.75% interest rate and a principal and interest loan more than 30% of their salary would be consumed by repaying the mortgage.
Sydney needs satellite cities with good commuter rail links to provide affordable housing, or we need affordable housing closer in probably as micro apartments.The satellite cities are Penrith, Wollongong, and Gosford.The median price of houses in these cities are certainly lower than the Sydney outer ring, over 20km from the CBD, with all of them below $600,000 (see table below).Liverpool at 38 km from Sydney CBD has a higher median house price at $690,000 however it is a CBD for that region.
Distance in time by fast train
|Penrith||47 min express||$556,000|
|Mount Victoria||2hours and 9min express||$385,000|
|Wyong||1 hour 36 min express||$411,000|
|Gosford||1 hour 19 min express||$560,000|
RP Data September 2015 for median prices and train timetable for travel times.
What happens to your quality of life when ten hours plus per week from Monday to Friday are spent sitting on a train? Let alone the commute to the station and the waiting time. Is this why some groups are critical of the investment in road infrastructure with West Connex and North Connex as we are facilitating the movement of people by car. How do we bring these cities closer to the Sydney CBD?
The METRO, the new train service to be delivered in 2019, will bring the northwest suburbs closer to the city with its driverless trains going every four minutes. It will also provide a faster public transport alternative for many established suburbs such as Cherrybrook and Kellyville. The proposed tunnel under the harbour for the METRO extension to Bankstown that is due for delivery in 2024 will increase the Harbour crossing capacity by 130%. This is the first expansion in capacity since the Harbour Bridge opened in 1932.
Can we build faster and more reliable public transport to shorten commuter times or do we need to consider vertical cities?
The median price of apartments within 10km from Sydney CBD is $750,000. This is about $125,000 more than a house that is over 20km from the CBD. This brings an appreciation of the ready adoption of apartment living in Sydney. Our Brooklyn effect is affordable apartments. It is a choice between a city life style with access to amenities and more cultural events or out in the suburbs with the backyard and a long commute. These smaller spaces mean the communities need access to life style options like coffee shops, restaurants, and parks to bring quality of life. Public transport to the city is key too to avoid paying city parking prices.
Micro apartments have just been out lawed by legislated in Sydney in the interests of quality of life (17th July 2015).This is at the same time as smaller properties are being adopted in Tokyo, New York and other Asian cities.
In Australia the considerations to create quality living spaces may be to legislate for best architectural design that would have allow smaller apartments with good natural light, mezzanine storage and maybe mezzanine sleeping quarters. Rather than thinking about them in square meters we need to think about them as cubic meters with a floor space that converts from living to dining and elevated sleeping and storage.These should be more affordable and would readily suit a single person, a couple and maybe even a couple with a small child.
Alternatively, a well executed investment strategy will support the investor creating or manufacturing strong capital growth for the deposit for an apartment or house of choice.