[Podcast] A housing shortage is the least of our problems according to Ross Elliot

I remember several years back, there was a computer game called SimCity that allowed players to build civilizations from the ground up.
As a player, you could build roads, water supplies, and industrial precincts as your city grew, and this would then attract workers whose taxes would allow you to continue to build your civilization, raise armies and conquer the world.

However, if you failed to provide adequate infrastructure, community sentiment would go sour, residents would leave, civilizations would collapse, and then as a player, would have to start all over again.

With Australia’s population likely to grow to 40 million people by mid-century, to a degree, this is what could happen in the real world.

Is Australia going to adequately provided infrastructure for our significant population growth, and if not, what will that mean for our standard of living and our property markets?

That’s what I discuss in today's show with my guest Ross Elliot.

Consequences of population growth

There is so much to be grateful for about living in Australia, but that doesn't mean we can be complacent.

What are the most important qualities of a liveable city?

While a lot of factors are important, infrastructure – including social infrastructures such as schools and hospitals – would be amongst the top factors.

As our population grows, and it surely will, this will place an increasing demand on our infrastructure, and maybe we won't be able to keep up.

Of course, it’s much more than just being stuck in the traffic or wedged in overcrowded public transport just to get where you need to get to, according to my guest today, Ross Elliot.

Currently, there is a housing shortage around Australia, with vacancy rates at record lows, rising rentals, queues for people lining up to rent accommodation, and posts on social media of people needing to live in caravan parks in tents.

With little new accommodation in the pipeline, the situation is only going to be exacerbated now that permanent migration has been lifted to 195,000 people per annum to address the skilled labour shortage, which is holding back our economy.

But Ross recently wrote that the housing shortage is the least of our worries.

What’s going to happen as the population grows:

• The acceleration of migration and population growth will have consequences.
• We’re going to have to rethink our town planning as more Australians are going to have to live in high and medium-density housing, which is currently restricted by local governments trying to appease residents concerned about road congestion, parking problems, and damage to neighbourhood character.
• Most of the additional “skilled” migrant intake will settle in major cities, where congestion problems are mounting.
• Another 1.5 million people, based on the average ratio of cars to people, will mean roughly an additional 1 million more cars on the roads. Plus, more commercial vehicles.
  • How will our public transport systems cope?
  • Our skilled migrants (with a wage floor below the average wage) will be “nurses, teachers, aged care and childcare, hospitality, IT, and other skilled workers”. These workers and the industries they work in are suburban, which means getting to and from work with any semblance of convenience, will involve private cars.
  • For every 100,000 extra people, expect 60,000 to 70,000 more cars on the roads.
• Another shortage will be health care.
  • Barely a night passes without another news story dealing with chronic shortages in our health system. Admittedly, some of these shortages are labor related (which skilled migrants will help address), but others are physical – we haven’t been building hospitals in pace with the population.
• Schools will come under pressure.
  • Private schools will be beyond the reach of new migrants on lower incomes.
  • Every extra million people (as, for example, predicted for each of our major capitals in just a few short years) will mean an extra 160,000 students.
• Our energy grid is currently having difficulty coping.
• There may even be a shortage of drinkable water.
• Spending more time thinking about the alleviating benefits of autonomous, electric travel might also be handy. This technology is already with us, it just hasn’t been widely deployed yet.
• How can we make better use of existing infrastructure?

Our rates of projected growth in our three larger cities are, by world standards, very ambitious. It’s not the quantum but the speed.

Growing faster than even Beijing or Shanghai ought to ring alarm bells.

Realistically, history and experience show we are just not very good at it.

Links and Resources:

Michael Yardney

Ross Elliott – subscribe to Ross’ blog – The Pulse

Read Ross Elliott’s blogs on Property Update here

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“Every night there’s something on the news about people who waited a long time for ambulances or sat in the emergency room because there was no bed.” – Michael Yardney

“Our projected growth of our three large cities, by world standards, is very ambitious.” – Michael Yardney

“The ability for your tenants to pay you more rent in the future is what’s going to underpin your life in the future.” – Michael Yardney

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