Lack of housing supply causes property prices to climb again as YIMBY movement gains pace

CoreLogic says property prices will remain high while demand for affordable housing outstrips supply. (Facebook: Community Housing Industry Association NSW)

The disconnect between housing supply and demand has seen property prices climb for the 15th month in a row, with the worsening affordability crisis creating a development density divide between generations.

The latest housing data from CoreLogic showed that house values increased by 0.6 per cent in April, with the national median property price rising to $779,817.

“It kind of goes against a lot of what we’re seeing in the Australian economy, which is low consumer sentiment, high interest rates, and depleted household savings,” CoreLogic’s Eliza Owen told the ABC.

“But overall, it comes back to the fact that demand is still managing to outpace the supply of property in the market.”

While Perth saw the greatest increase to property values last month, Sydney remains the only capital city with a median property value over $1 million, according to CoreLogic.

The data also showed rents climbed faster than the rate of house prices, up 0.8 per cent in April, largely due to the increase in overseas migration during the past two years.

Sydney town planner Melissa Neighbour has noticed the worsening housing affordability crisis is creating a divide between older Australians who own their own home without a mortgage, and younger people who are faced with higher housing costs — whether it be to rent or buy property.

“At the moment, we’re seeing 30 and 40 year olds leaving the city because they can’t afford to live here,” Ms Neighbour told the ABC.

“We’re losing families, we’re losing essential workers, all of these people [who] make a city functional.”

The rise of YIMBYism

The ongoing housing affordability crisis is why Ms Neighbour decided to co-found Sydney YIMBY, or ‘Yes In My Back Yard’.

It describes itself as a grassroots activist group that was set up to counter so-called NIMBYs — the ‘Not In My Back Yard’ residents who campaign against developments in their neighbourhood, often medium and high density housing.

Ms Neighbour said while Sydney YIMBY might share some views with property developers, the group is independent and doesn’t take any money from them.

“You know, I myself am a renter,” she said.

“I would love to buy in the city, but I don’t think that will be possible for me. And even more frightening is that I worry that my son may not be able to afford to live in this city one day.

“There’s a real divide that’s been created through this housing crisis and the inequality across the demographics.”

The solution to a lack of affordable housing, as Ms Neighbour sees it, is more development, especially in suburbs closer to the city centre, and buildings that are medium and high density.

One such development is in the leafy residential area of Neutral Bay, a short drive across the Sydney Harbour Bridge from the city’s CBD, where a proposed rebuild of a Woolworths into a new Coles supermarket and residential apartment block has been lodged with the local council.

The design is a red-brick three-storey development with the supermarket on the ground floor and, further back from street level, taller apartment blocks.

It’s exactly the sort of development Sydney YIMBY wants to see more of — and exactly the sort that attracts fierce resistance from existing residents.

“We need more medium density in our existing urban areas,” Ms Neighbour said.

“In Australia, our urban development patterns are very similar. We have a centralised business district, which is surrounded by what we call the urban carpet — you know, low detached housing spread out and dominated by streets and roads and cars.

“What would be great to see is redevelopment of some of our existing urban areas, where more density can be brought in at the right scale.

“So we’re sort of talking about dual occupancies, up to six storey apartments, particularly around town centres, and around train stations, that’s going to bring more vibrancy, density drives amenity — we have more shops and a better lifestyle.”

Across the road from the proposed new Coles site sits another potential future development at a Woolworths supermarket that has been met by even stronger resistance from local residents.

Ms Neighbour said the battle playing out over the two proposed developments in Neutral Bay exemplified the demographic divide that has emerged amidst the housing affordability crisis.

‘I want the best in my backyard’

What YIMBYs are up against is NIMBYs, a group often characterised as older residents who own their homes outright and may be retired, with the time and desire to attend local council meetings.

“Typically, these groups are people who are wealthier, English-speaking backgrounds, potentially retirees,” Ms Neighbour said.

“They have more time on their hands, which means they’ve also had more time to understand how the planning system works.”

In contrast, Ms Neighbour said YIMBYs tended to be younger, in their 20s to 40s, renting, time-poor with young children and working full time.

The application for the new Coles supermarket on the council website reveals hundreds of submissions opposing the development with reasons ranging from increased traffic, the aesthetics of the design, to the height of the proposed building.

Many objections cited the “village atmosphere” of the suburb and said it was already overcrowded and this development would make matters worse.

When the ABC visited the current shopping village, some local business owners said they were concerned the design did not have adequate space for deliveries and the long construction process would harm local small retailers.

Local resident and campaigner Meredith Trevallyn-Jones said most residents were not against all development in the suburb, just those that she said are not suitable for the area.

“I don’t think there are that many people who want nothing. I think most people recognise that we need to keep investing in our built environment, that we need to improve our cities, that density is an inevitability,” Ms Trevallyn-Jones said.

“I don’t agree with those who simply say, well, yes to everything. But I think the community needs to be able to have a look at what’s being proposed and to have some input.”

It’s for that reason Ms Trevallyn-Jones does not consider herself to a NIMBY, and personally felt as though the proposal for the new Coles supermarket was well designed.

“I want the best in my backyard, so I guess that makes me a BIMBY,” she said.

Ms Trevallyn-Jones said a different proposal to redevelop a Woolworths site across the road had been met by even more fervent opposition by locals, with concerns that included the building height, overshadowing of nearby buildings and extra car parks leading to more cars and traffic in the area.

“It’s out of scale — it’s a really large scale type of approach,” she said.

It is this larger scale — whether medium or high density — that YIMBY groups argue is necessary to increase new housing in suburbs close to the CBD with relatively little available land.

Housing supply only ‘part’ of the picture

However, PropTrack economist Cameron Kushner said increasing housing supply was only one part of the housing affordability picture.

“I think we also need to look at the housing we’ve already got,” he said.

“At the time of the last census we had about 28 million bedrooms in Australia and around 24-and-a-half million people.”

With a backlog of new housing to be built and construction costs soaring, Mr Kushner said addressing the issue at a taxation level to better utilise and redistribute existing housing was a more immediate and effective solution.

“The way we do that is removing things like stamp duty, which discourage people from upsizing and downsizing in the market,” he said.

He said stamp duty could be replaced with a land tax to incentivise home owners and empty-nesters to sell up and downsize — but Mr Kushner admitted the potential solution was bound to be met with much political resistance, as “nobody likes new taxes”.

“It’s very difficult to then turn around and say to someone that has paid stamp duty that you’re now going to incur a tax on your property every year,” he said.

Another tax solution he proposed was to include the family home in the pension asset test.

“At the moment you can have a property worth millions of dollars, and you still get the full pension, whereas we want people to actually downsize out of those homes and use those funds to fund their retirement,” he said.

But Mr Kushner said this proposal would also hit a giant political hurdle, as “we know that retirees are a big voting bloc, and it would probably push back pretty heavily on that”.

The holy grail, in Mr Kushner’s view — which he admitted no government would be bold enough to touch — was putting a capital gains tax on the family home.

“At the moment, owning a family home is completely capital gains-tax free,” he said.

“And I think that’s another reason why so many people hold on to their family homes, because it has appreciated so much in the past.”

Mr Kushner said while increasing housing supply and density would help create more affordable housing, so-called NIBMYs did hold genuine concerns such as whether infrastructure, schools and public transport are sufficient to support higher populations.

“NIMBYs are certainly a problem but I don’t think we should just dismiss them and their issues straight out of hand,” he said.

Eliza Owen from CoreLogic agreed that increasing supply alone would not solve the housing affordability crisis, and also advocated changes to tax structures to encourage a redistribution of residents among existing housing.

“It’s important to address the supply, but supply is kind of inelastic, it’s not something you can change in the short term, because homes take time to be built, especially now when construction cost inputs are very high and the amount of labour to build that housing is relatively constrained as well,” she said.

“There are demand-side policies that we should be looking at that can address housing demand relatively quickly.”

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