INVESTOR-LED ACTIVITY IN
AREAS OF SOCIOECONOMIC DISADVANTAGE
KATH HULSE and
MARGARET REYNOLDS
CRICOS Provider
00111D
Investor-led activity in areas of socioeconomic disadvantage
Overview of presentation
Swinburne
1. Dominant explanations of links between concentration of
socio-economic disadvantage and housing markets
2. A paradox: areas of persistent socio-economic
disadvantage in Australia’s three largest cities but
‘improving’ housing markets 2001-2011
3. ‘Investification’: the role of rental investment in
disadvantaged suburbs
4. Discussion
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Investor-led activity in areas of socioeconomic disadvantage
Dominant themes in the literature
Swinburne
- Vast literature on processes that underlie residential
differentiation by socio-economic status
- 2 dominant explanations the linkage between socioeconomic status of areas and housing markets:
- ‘Poverty neighbourhoods’ - persistent high socio-economic
disadvantage and persistent low value housing markets
(‘trapped’)
- Gentrification – decrease in socio-economic disadvantage
and ‘improving’ housing markets (‘displacement’)
- What does detailed empirical research in Australia tell us
about the relationship between housing market change
and socio-economically disadvantaged areas?
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Investor-led activity in areas of socioeconomic disadvantage
The research
- Part of a broader program of
research
- This project - identification of
disadvantaged areas
(population-based measures)
and housing market analysis
- Detailed empirical analysis
involving customised Census
data and 6 major
administrative data sets
2001-2011 (3 largest cities)
on sales prices and ‘entry
rents’
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Swinburne
- Research team: Kath Hulse,
Hal Pawson, Margaret
Reynolds and Shanaka
Herath (Swinburne and
UNSW)
- Funded by AHURI
- Report published 2014
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Investor-led activity in areas of socioeconomic disadvantage
Context
Swinburne
Highly urbanised pattern of settlement – within 50kms of
coast (population 21.5m in 2011):
-
Almost half of population lived in three largest cities on eastern
seaboard (2011) – Sydney 4.4m; Melbourne 3.9m and Brisbane 2.0m
Cities are low density and cover large geographic areas
High level of population and household growth 2001-2011
Spatial units:
-
Capital City Statistical Division (economic unit that ‘represents the city
in a wider sense’ - ABS 2006) – allows for 15-20 years of growth
-
Suburbs (av. population 4,000-7,000)
-
177 disadvantaged suburbs (or 10% of all suburbs in the three cities)
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Swinburne
Investor-led activity in areas of socioeconomic disadvantage
Spatial patterns of socio-economic disadvantage
- General patterns:
-
Contiguity of disadvantaged suburbs (only 14% non contiguous)
-
Socio-economic disadvantage a suburban phenomenon – away
from CBD (the ‘suburbanisation of poverty’)
-
Clear agglomerations of disadvantaged suburbs in the 3 cities
- Persistence of disadvantage using established index of
relative disadvantage (ABS SEIFA IRSD) 2001-2011
-
Some evidence of ‘gentrification’ in suburbs nearest to CBD (esp.
Melbourne and Brisbane)
-
Some outward spread of relative disadvantage
-
Some differences between cities
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Sydney: change in socio-economic disadvantage 2001-2011
.
Melbourne: change in socio-econ disadvantage 2001-2011
Brisbane: change in socio-econ disadvantage 2001-2011
Investor-led activity in areas of socioeconomic disadvantage
Housing market change 2001-2011
Swinburne
Context:
-
Household growth – particularly in Melbourne and Brisbane
-
Real increases in sales prices and rents
-
Some differences between cities
Role of disadvantaged suburbs in city housing markets
-
Greater ‘affordability’ discount for purchasers in disadvantaged
suburbs than for renters
-
Despite house price increases, rents still closer to city medians in
2011 than for sales
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Sydney: housing market change (sales) 2001-2011
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Sydney: housing market change – entry rents 2001-2011
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Sydney: comparing sales and rent changes 2001-2011
Movement toward/away from, city median: house sale price:
all Sydney suburbs, 2001-2011
Movement toward/away from, city median: entry rent:
all Sydney suburbs, 2001-2011
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Melbourne: housing market change 2001-2011
Movement toward/away from, city median: house sale price:
all Melbourne suburbs, 2001-2011
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Swinburne
Movement toward/away from, city median: entry rent:
all Melbourne suburbs, 2001-2011
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Brisbane: housing market change 2001/2-2011
Movement toward/away from, city median: house sale price:
all Brisbane suburbs, 2001-2011
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Swinburne
Movement toward/away from, city median: entry rent:
all Brisbane suburbs, 2001-2011
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Investor-led activity in areas of socioeconomic disadvantage
Recap
Swinburne
- Relative socio-economic disadvantage persisted in these
suburbs 2001-2011
- Housing market ‘improvement’ for sales and rents
- Contextual factors – strong demand 2001-2011 as a
consequence of economic growth and household growth
- Role of disadvantaged suburbs in housing markets:
- ‘Affordable’ entry points for purchasers (particularly
detached dwellings)
- ‘Cheaper’ rental housing – but not much cheaper
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Swinburne
Investor-led activity in areas of socioeconomic disadvantage
Increase in private rental sector in disadvantaged suburbs
Table 4: Private and social renter households in disadvantaged and other suburbs, three
cities, 2001 and 2011.
Sydney
Melbourne
Brisbane
Disadv.
suburbs
Sydney
total
Disadv.
suburbs
Melbourne
total
Disadv.
suburbs
Brisbane
total
% Private renter
households
2001
2011
% Social renter
households
2001
2011
Private and social
renters
2001
2011
23.9
27.0
14.1
12.7
38.0
39.7
23.1
25.1
5.7
5.2
28.8
30.3
19.1
25.1
6.2
5.8
25.3
30.9
19.0
23.3
3.3
3.0
22.3
26.3
25.4
30.7
14.4
11.9
39.8
42.6
24.0
27.2
4.8
4.3
28.8
31.5
Source: Based on ABS Census of Population and Housing data, 2001 and 2011
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Swinburne
Investor-led activity in areas of socioeconomic disadvantage
Role of disadvantaged suburbs in city private rental market
Table 5 – Percentage of city-wide most affordable (lowest quartile) new rentals in
disadvantaged suburbs by dwelling type, three cities, 2001 and 2011
3 bedroom detached
2001
2011
1-2 bedroom other
2001
2011
Sydney disadvantaged suburbs
42.1
40.0
43.8
39.3
Melbourne disadvantaged suburbs
48.1
44.3
35.3
28.9
Brisbane disadvantaged suburbs
40.2
40.8
23.8
13.9
Source: State rental bond authorities, Sydney (NSW Fair Trading); Melbourne (Residential Tenancies Bond
Authority), Brisbane (Queensland Residential Tenancies Authority), 2001 and 2011 (2002 for Brisbane).
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Swinburne
Investor-led activity in areas of socioeconomic disadvantage
Reasons for increase in private rental in disadvantaged
suburbs
- Dominance of small household level investors
- Higher annual rates of capital appreciation 2001-2011
than cities generally
-
e.g. Melb 7% p.a. real increase in median house sales prices
compared to 5.7% city-wide 2001-2011
- Relatively good rental yields for investors in DS as
median rents moved much closer to city medians 20012011
-
e.g. Sydney rents for 3BR detached houses in DS 91% of city
median by 2011
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Emerging areas of disadvantage, Melbourne,
2011
Swinburne
Figure 1: Suburbs of emerging disadvantage in Melbourne, location map
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Source: Derived from Table 25, digital boundaries from Australian Bureau of Statistics
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Investment hot-spots Melbourne 2014
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Swinburne
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Investor-led activity in areas of socioeconomic disadvantage
A paradox?
Swinburne
‘Poverty neighbourhoods’
-
Persistent socio-economic disadvantage (‘trapped’)
-
Housing market disconnected from city markets
Gentrification
-
Decrease in socio-economic disadvantage (‘displacement’)
-
Housing market increasingly connected to city markets
Our study
-
Persistent socio-economic disadvantage (‘trapped’ or ‘continual
replacement’)
-
Housing market increasingly connected to city markets
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Investor-led activity in areas of socioeconomic disadvantage
Discussion
Swinburne
- Persistent high levels of socio-economic disadvantage
using population based measures and ‘improving’
housing markets
-
Little evidence around ‘poverty neighbourhoods’ - staying in
disadvantage suburbs involves higher prices/rents
Gentrification could explain some of the change in well located
areas closer to CBDs – but little evidence of ‘displacement’
‘Investification’ - investor-led activity in disadvantaged suburbs.
- Other possible explanations
-
10 years may be too short a period to assess change
Socio-cultural explanations - vibrant communities – high level of
overseas born people
‘Concentration of disadvantage’ not as deep or widespread in Aus.
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Investor-led activity in areas of socioeconomic disadvantage
Detailed analysis
Swinburne
Hulse, K., Pawson, H., Reynolds, M. and Herath, S. (2014)
Disadvantaged places in urban Australia: analysing socioeconomic diversity and housing market performance, Final
Report Series No 225, Australian Housing and Urban
Research Institute, Melbourne pp.1-96
http://www.ahuri.edu.au/publications/projects/myrp704
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Thank you
Further information
Kath Hulse
[email protected]
CRICOS Provider 00111D