HOW DID WE GET HERE?
What we have is increased competition for housing of all kinds resulting from increasing under supply. It is a rapidly expanding problem due to a lack of understanding of the causes (and thereby inability to ‘cure’) and a ‘responsibility acceptance failure’.
Many people use the phrase ‘affordable accommodation’ when they discuss the need. This couldn’t be further from the truth. The crisis is so dire that we need all kinds of accommodation.
It's not about ‘affordability’ when you can’t get a property no matter how much money you have. It’s about supply. Or lack of.
We have heard many stories of single parents, young people, people with disabilities being pushed out of the market, but this does not reflect the extent of the issue as it's not about specific need or capacity. A local doctor’s surgery is considering closing as it can’t keep staff, doctors included, as they can’t secure accommodation.
This crisis is NOT the result of ‘COVID’ or ‘supply chain issues’ - yes, they have contributed, but a rental crisis on the Sunshine Coast was predicted to occur now, 10 years ago by Mal Cayley of the Direct Collective. The national crisis has been forming for 25 years, but particularly in the last 5 years.
Page 3 of the Grattan Institute Report says it well:
‘It took neglectful governments two decades to create the current housing affordability mess. They preferred the easy choices that merely appear to address the problem. The politics of reform are fraught because most voters own a home or an investment property, and mistrust any change that might dent the price of their assets. But if governments keep pretending there are easy answers, housing affordability will just get worse. Older people will not be able to downsize in the suburb where they live, and our children won’t be able to buy their own home.’
People are being forced into homelessness or are being priced out of the market and moving away from the Sunshine Coast because there is a severe under supply of homes in the region. On the Sunshine Coast, this under supply has been growing for the past 10 years due to a range of factors that have been greatly intensified by inadequate planning schemes and application of planning over the long term, exacerbated by macro-prudential regulation (lending and housing policies) and multi-level government approach to impede the main source of supply being those who provide accommodation for the rental market. That is Community Housing of all kinds and Private Rental housing.
Housing is a basic human need. This initiative is about human rights - for shelter and safety, for the confidence to be able to live where you want to live.
Together we can change the narrative about what housing is. This is not about ‘affordability’ or the ‘market’, this is about human rights, social justice and a Home for Everyone Under the Sun. We have a multi-faceted housing crisis on the Sunshine Coast and while we must work to house those in dire need, to stem the rise of first time homelessness the first crisis we must resolve is the rental crisis.
TAKE THE INITIATIVE, JOIN THE MOVEMENT, BE THE CHANGE.
This section talks specifically to the ISSUES affecting the sunshine coast - for higher level (macro) causes, please read.
the Causes
understanding the undersupply
over the past 12-18 months we have seen the rental market continue to tighten and house prices continue to rise. people are being forced into homelessness or are being priced out of the market and moving elsewhere. These are clear Demonstrations of undersupply on the sunshine coast.
On the graph above, the yellow line shows the growing gap between what is needed and what is delivered. When this gap is compared against the increase in population and average household size to identify new dwellings required to meet demand we understand that what is being delivered is not only not enough, but not enough of the right type of dwelling. This is a fairly rudimentary summary but clearly shows a growing undersupply creating the challenges we see today.
The general commentary around ‘affordable’ housing misses the key issue of the broad range of causes and, improtantly, the Sunshine Coast demographic profile now, and the change it’s taking.
The Sunshine Coast desperately needs ALL forms of housing, from the most expensive, to the least expensive to unlock the market - let us explain:
When not enough property has been supplied, people will compete for property and those with the most capacity will win. When we look at the Sunshine Coast demographic profile we are known for our large retirement population, but we are quite unique in that we are a Gen X town. This is rare.
The largest demographic group in Australia are Millennials, but not on the Sunshine Coast. Boomers are still the largest demographic group here, but half of this cohort is in, or is moving into, the retirement phase, yet people over 65 still haver the highest net worth or any demographic group. Gen Xers are building for their future and these two senior groups are essentially outbidding Millennials for their piece of paradise.
How many Millennials are we missing? 20,000 Millennials that should be here, based on national averages. Some might argue that is because the Sunshine Coast is a ‘retirement haven’. This is true of the past but the demographic profile shows Millennials want to come, are trying to come, but are struggling to find housing.
The graph ‘Sunshine Coast - Population by Generation’ shows the large jump in Millennials but we still haven't caught up to national averages. Pre-COVID, the Sunshine Coast had one of the highest growth rates per capita in the State and we were seeing significant growth in this demographic. In recent times this growth has declined, with some Millennials locked out of the market or ‘kicked out’ due to a lack of affordable accommodation.
We are losing the very people who will add value and diversity to the future of our economy and our lifestyle going forward. The Sunshine Coast is in the infancy of an economic transformation which will be cut short if we don't resolve the accommodation crisis.
One example of our economic transformation is in the announcement of Maropost (an E-commerce Platform and Marketing Automation company) entering the Australian market and making the Sunshine Coast their new national headquarters. With a projected workforce of 200 staff in their Sunshine Coast HQ office, its is estimated the business will attract at least 150 new staff to the Coast, or 300-400 new people, predominantly Millennials. Where will they live? Especially when other Sunshine Coast unique exponential growth drivers such as a new CBD, Airport expansion, Subsea Cable establishment, Hospital Precinct development and others simultaneously develop.
The Sunshine Coast Property Market Update talks more to the future drivers of change. Download your free copy via the link above.
Before we come back to the today issue…
if we didn't have a crisis today, based on the current planning scheme and its application, we would within 5-10 years. Unfortunately, we start with the worst housing crisis we have ever seen - and its going to get worse before it gets better.
THERE IS NOT ENOUGH HOUSING to accommodate all the people who are here and the masses who are still coming. The rate of growth of the population has been far greater than the rate of new housing creation.
Coming back to our demographic profile what this means is that when you don’t have enough housing, people will buy what they CAN versus what they WANT. Intense competition drives up prices. So, who has the most capacity? It’s also those within the largest population groups:
The increased competition drives up prices and when that happens in a region that’s has been essentially underpriced for a long period of time, those new to the region see it as cheap and are willing to compete harder. Those with investment properties see it as an opportunity to capitalize on their gains - to sell. With such intense competition from those looking and with the capacity to own, most investment properties going to the sales market are then being sold to owner-occupiers. Let’s hold that thought for a moment.
Back to the Millennials. So, what do you do if you can’t buy? You rent. But the rental stock is reducing and prices are going up. Keep in mind people are still coming to the region, Boomers and Gen Xers included.
The focus on rentals is because of the rise in first-time homelessness. There are families of four who can afford $580 per week in rent but have to send their kids to school from the car they are living in, because they can’t find a house to rent within their budget.
So what are the numbers?
Between the 2016 and 2021 Census on the Sunshine Coast:
The number of total housing stock increased by 17.8%
Rental stock only increased by 8.6% by comparison – it should have increased at the same rate
On just the number of properties that were created between 2016 and 2021, we have lost almost 3,500 rentals to owner-occupiers for the reasons we explained above
With a year since the Census and the ratio of investor to owner-occupier sales increasing, we believe this number to be well over 4,000 rentals lost from the Sunshine Coast market in the last 6 years, predominantly in the last 2 years.
Part of the reason for the growing loss is that approximately 2/3 of homes going on the market for sale are investor stock yet around only 1/3 remain as rental properties after they’ve been sold. Some estimates suggest that for every 100 properties being sold on the Sunshine Coast, 30 families are being displaced as their rental is sold to an owner-occupier.
Between the undersupply and the number of investment properties gone to owner occupiers the number the Sunshine Coast is effectively missing is predicted to be over 5,500 rental properties – to put this in perspective, that is half the size of the North Lakes estate in Brisbane’s North, or about 14,000 people displaced!
The actual number could be much higher
Even though the number of properties is increasing, it is not keeping up with the population growth and the undersupply is not addressed, rather, it is being made worse.
With the data on the number of rental properties, and in the scheme of the overall undersupply, that means that 80% of the undersupply on the Sunshine Coast relates to affordable properties, predominantly rental properties. This is why we have a rental crisis and a rising homelessness crisis.
This does not mean we just need more ‘affordable’ homes - this is where we start changing the narrative. We need more HOMES. All kinds. Giving people choice to buy or rent what they WANT, not what they CAN. The answer to this crisis is SUPPLY.
Our community is held at ransom due to the missing middle.
To put this in perspective, to stop the development of a high end apartment because its not ‘affordable housing’ and will not affect the ‘rental crisis’ because it is ‘not affordable’ is a misguided view. Lets be clear that this mindset generally comes from NIMBYism (Not In My Back Yard) - however it’s prudent to note that ALL property is needed on the Sunshine Coast right now.
For example:
That high end apartment might be exactly what is needed for a Boomer couple to downsize into. Without that option they could be trapped in their 4 bedroom, 2 bathroom, 2 living, 2 car home on a large block that is way too big for them. At the same time a Millennial couple in a small 3 bed, 1 bath, 1 car that now has children is looking to upsize but can’t because the Boomer’s aren’t selling without somewhere to go to. A First Home Buyer would love to purchase the product the Millennials are in, or even an investor to add it to rental supply, but alas, the loss of that high end apartment has blocked them all out.
So at the end of the day, those who prevented the development of that high end apartment protected what they want, but hold everyone else at ransom. That is unAustralian. That is not who we are and as a community we need to make sure our voice is heard so that all levels of government and those opposed to growth understand what they are actually doing is pushing people out of the region or onto the street.
It gets worse, what if that Boomer couple are trapped in their home that is actually in an area zoned for medium density and their home could have provided 20 new homes - perfect homes for Millennials, first home buyers, renters …
We can get a win-win for everyone!
While the crisis has been brought about by a failure to deliver enough dwellings, it is made worse and complicated by the type of properties that have and have not been delivered. Approximately 70% of dwellings on the Sunshine Coast are ‘detached’ or individual houses, with approximately 30% ‘attached’ or apartments and townhouses. Current approvals has this number around 64% and 36% respectively. There is demand for smaller dwellings (noting that >60% of our households are 1 or 2 people) so this number should be flipped to 38% and 62% respectively!
The result is lack of options for downsizers, singles, couples, first home buyers and renters of all kinds. The type of dwellings needed are secondary dwellings attached to houses, sharehouses/dual living homes and apartments, duplexes, triplexes, townhouse and medium density (low rise) apartments. This is known as the ‘missing middle’.
The Sunshine Coast has all the factors to become the greatest city in Australia by 2041 and beyond. However, the constraints on housing supply will see the community suffer and we are on track to dramatically undershoot what could have been.
Mal Cayley, COO of Direct Collective predicts, “The Sunshine Coast is already on path to fall short of all we aspire to be in the Olympics dream our community has if we don’t make rapid change today. 10 years ago people thought I was foolish when I said there’d be a rental and housing crisis by 2022. Either I’m right like I was for the last 10 years or I’m being ‘foolish’ today, but I’m pretty confident in the data and it’s very, very concerning.”
We are conscious of the fact that many in our community do ‘not want to become another Gold Coast’ and there is a lot of noise around ‘anti development’ but the truth of the matter is that with proper planning we can have sustainable development to house our community without detracting from the lifestyle.
A NO or STOP mentality is not sustainable or humane.
We need a collaborative, SOLUTION-focused view that sees us provide a safe sanctuary for all members of our community while ALSO supporting the environment, the culture and the lifestyle we love. We are approaching this with an AND mentality, not OR. Let’s protect the environment AND house people. Let’s protect what we love about this region AND develop sustainably.
We have solutions but we need your help to bring them to life.