Posted by: dave | February 1, 2010

Why the Sydney property market is like the French job market

Image of Sydney houses

The worst thing about the past few weeks of temporary homelessness has been the experience of being thrown back into the cold supercilious embrace of the Sydney rental market. Londoners like to think their city is in the grip of a unique property madness, only barely alleviated by the recession, but this survey last week indicated that Sydney is far worse – second worst in the world, in fact, after cuddly old Vancouver.

This feels intuitively right. At one property I was looking at in Bondi Junction a couple of weeks ago, the real estate agent was a veteran of one of the glitzier London estate agents’ Sloane Square office. She moved here about six months ago, and said that the property market in Sydney 2010 is crazier than it was in Chelsea in 2008 – and I’d already said I wouldn’t put in an application, so she wasn’t saying this to get me all desperate.

You come up against the sharp end of this any time you go to look at property, whether to rent or to buy. The first thing you notice is that you can only view a place at a few, very limited showing times, when there will be (often literally) dozens of other interested parties tramping through the house. At one viewing of a fairly average property directly underneath the airport flightpath in Stanmore last week, there were more than 20 people milling testily about on the pavement before we were led in for the standard 15-minute viewing slot. A house-hunting friend told us that in Paddington she turned up at a property with a one-in, one-out policy, as if it was some sort of achingly trendy nightclub rather than a small and slightly shabby flat.

This situation is made worse by the fact that almost all viewings are on Saturdays between around 10am and 1pm. That makes hunting for a rental property require the sort of planning skills necessary to pull off, say, a major sporting event or a terrorist attack. First you select your potential properties, weeding out ones that are obviously rubbish and desperately trying to track down elusive letting agents for more details on the borderline cases (if you do get in touch with them – and it’s harder than getting an audience withe the Pope – the agent invariably hasn’t got a clue).

Then you get out Google Maps, plot their locations and work out which properties you can possibly make it between in the limited time available, bearing in mind that between 10.30 and 12.30 there will inevitably be one ‘possible’ viewing almost every 15 minutes, however much you’ve whittled down your list. Finally, you draw up a battle plan, get a car for the day and scream around all morning trying to hit your rolling 15-minute deadlines. The only thing making this process easier is that, occasionally, the letting agents don’t even feel the need to turn up, so you can move on early to the next place having waited five minutes, called their mobile phone, and found it turned off.

I’ve not dipped my toe in the sales market yet, but this is, if anything, worse. In most of inner Sydney, auctions are the norm, with very high reserve prices, so that there is a relentless upward pressure on prices accentuated by the excitement of the auction process. Australian banks, for all their vaunted austerity, seem to be pretty lax with their lending practices, so there’s a lot of unaffordable debt chasing each property.

I’ve been puzzling over just why this is so insane. One obvious point is supply and demand: there’s clearly far, far more demand for properties in Sydney, especially in the inner-Sydney suburbs where people like me want to live, than there is supply to meet it.

Part of that is probably a result of Sydney’s status as an international city with a pretty shoddy public transport system – people who have lived in Europe, Canada, and places like New York expect to live in suburbs where there is a bit of life within 20 minutes’ walking distance, a corner shop and a cafe, maybe a school, and hopefully a decent bus route or train station that will allow you to commute to the city centre within an hour. Most of Sydney just isn’t like that – this is a gross exaggeration, but such suburbs are pretty much only to be found between the harbour and the blue line on this map:

Zoom out and you’ll see what a small proportion of the metropolitan area that makes up. So you have a large population of relatively well-off cosmopolitan locals, migrants and remigrants all competing for property that answers lifestyle expectations that are far from the Australian norm.

That explains the demand side of it, but not the supply side. We’ve been looking for places across an area with about the same population as five London boroughs, and the simple fact is that there’s been very few places on offer. This, I think, is why the Sydney property market is like the French job market.

When I first came to this city nearly eight years ago, I was very impressed with the levels of tenants’ rights available. It was harder to be evicted, there were more controls over handling of your deposit, and in contrast to the typical London tenancy agreement – in which there are pages and pages of tenants’ responsibilities, and two lines of landlords’ – both parties’ duties and rights seemed pretty evenly matched. In other words, it is a great place to be an incumbent. Once you’re leasing a property, you have escaped the rental market rat race, you’ve got good rights, and your landlord is likely to find it possible but unduly complicated to move you on without good reason. As a result, people just don’t move so much once they’re renting a place.

Likewise with the French job market – once you’ve got a job, you are almost impossible to sack and the benefits come flowing in. As a result, French people don’t leave their jobs often, and Sydneysiders don’t leave their homes. The flip side of this is that househunting in Sydney is like being jobless in France – frustrating, fruitless and humiliating all at once.

Oh well. We’ve got a place now, so I’m part of the boss class and don’t need to moan any more.

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