Community facilities are necessary to keep home buyers both healthy and happy

By Catherine Cashmore

Tuesday, 20 March 2012

Well, was it any surprise? Last week we saw a report publicised that blamed obesity on outer-suburban living. It wasn’t the only health issue highlighted; others such as respiratory problems, abuse of alcohol, depression, and various other mental and physical diseases resulting primarily from poor lifestyle were cited. It’s a long shot to solely lay the blame on fringe living for a destructive lifestyle. It’s true residents in outer-suburban locations are generally more reliant on their cars as their prime method of transport and therefore won’t be walking to the non-existent “local” shopping strip and various other amenities abundant in our established inner-city ’burbs, however there are many other contributory factors we must consider – poor education being the first.

However, the report wasn’t revealing anything new – for years various studies have been citing rural and “growth” suburbs as hotspots for obesity epidemics, and it’s not a problem unique to Australia – similar results are also to be found in the USA, UK and throughout the western world.

Currently our outer-suburban new estates are amongst the fastest-growing suburbs in Australia. Areas such as Wyndam City and Whittlesea North in Victoria, along with Ipswich in Queensland, Camden in Sydney, and Wanneroo in Western Australia are just a few of the fringe localities that are all outperforming in the population stakes.  Some are running high on the mining boom, however these are commonly pulling in “fly in, fly out” workers and investors more than potential owner-occupiers.

The vast majority of home buyers are heading outwards for one of two reasons – the first being affordability.  Most houses in the new estates come with an attractive median price tag in some cases well under $400,000. Considering the average home loan hovers between $290,000 and $327,000 depending on which state you purchase in, it’s no surprise to see strong demand around the fringes, especially in times on low confidence and financial instability.

Government incentives are another inducement that pull purchasers outwards. The first-home buyer boost during the GFC offering generous grants for regional purchases produced large jumps in the median house price (resulting from increased buyer demand) and also inflated population figures in many of these localities. The same results have been replicated in NSW throughout 2011 due to cuts in stamp duty for first-time purchasers (cuts that have now been withdrawn for existing properties, but remain for new homes, mostly located in the outer-suburban estates).

However, the main buyers forced to look out of town are young families unable to afford their dream in the inner-city suburbs, which for the price of a house in woop woop would only be able to purchase a one-bedroom flat at best.  For those on tight budgets, it’s not a bad option – after all, our now affluent middle-ring suburbs were once considered outer suburban with similar issues as those above.  Fast forward some 20 (or so) years later and their median house prices are considered “unaffordable” and resident lifestyles improved with better amenities. Therefore it can – in some circumstances – be a good initial footstep onto the property ladder.

For years both state and national governments have understood the importance of facilitating the outer-suburban regions with adequate community facilities such as reliable public transport systems, schools, shopping centres, leisure centres, train lines, open park land and so forth. However, the cost of doing so has always fallen heavily on developers and purchasers, resulting in limited land releases and hefty development overlays. Most notably, promises of improvements in infrastructure supposedly funded by these development overlays generally go unfulfilled.  Quite simply, local government is now facing the stark reality of unprecedented growth, which has been forecast for decades by the ABS, but hasn’t been adequately planned for – whether this be through lack of funds or poor administration.

The prevalence of obesity results not only from the lifestyle, but also the socioeconomic status of the demographic. Studies done previously by the Australian National Rural Health Alliance Inc – Australia’s peak non-government organisation advocating for rural and remote health – shows “obesity is particularly prevalent among men and women in the most disadvantaged socioeconomic groups”.  These groups are generally located in remote or poorly facilitated outer-suburban areas such as those mentioned above. Not only are there a lack of sports and leisure facilities, it’s also been shown by “market basket surveys” in the Northern Territory that the further away from the city you migrate, healthy food items increase in cost in regional localities. Results that have been replicated in studies done by the Queensland HFAB (Healthy Food Access Basket) and various other organisations both here and abroad.

However, let’s be clear about this – purchasers don’t buy into these areas just because they have no choice. The second reason they buy in these localities is the abundance of property better suited to their version of the “McMansion-style Australian dream” – preferring to compromise on location rather than house size.

The old Aussie obsession of a quarter-acre block and detached family home may have modified somewhat as the population increased, however it has never disappeared.   It’s true, flats and apartments marginally outperform house sales in capital growth statistics; however, this is due to decreasing land sizes and greater density in the inner-city suburbs, where they make up the bulk of the housing stock.

Those who hold professional positions in the capitals are often unable (and unwilling) to live distances that require long commutes to the work place or local shopping strip.  However given the choice, there are few who would choose an apartment over a four-bedroom home, and countless studies have proven this with home sizes increasing, despite household numbers decreasing. Single-person dwellers may be the fastest-growing demographic, however “family units” are still our biggest buyer market and therefore affording the size of home needed and desired in an inner “well established” locality just isn’t possible for a growing demographic.

Oliver Hume real estate agency, which holds the market when it comes to land sales, reports that even though block sizes have decreased, due to affordability, the desire hasn’t diminished for large houses. In its 2011 Survey of Purchaser Sentiment, the company points out that large houses are still as requested as they were previously.

Given choice, the majority of purchasers wouldn’t push to the outer suburbs; however they do so because they often want to buy something bigger. And who can blame them? No one really wants to live in areas of increasing density. It’s one of the major complaints inherent in inner-city residents and hardly conducive to a healthy environment.  The levels of obesity may be lower in well-established affluent suburbs, but living in overcrowded polluted streets where despite being crammed in, you don’t know the person living in the upstairs apartment, and your once-private backyard is now overshadowed by the surrounding subdivided townhouse developments, is hardly an improvement on the suburban sprawl.

Believe it or not, the secret to all of this lies in “happiness economics”. If we’re going to effectively manage a growing population – something inevitable to our future evolution – we need to understand the importance of happiness in the equation.  Diseases such as those mentioned in the recent reports laying the blame for obesity and depressive illnesses on poorly designed suburbs are all stress related and prevalent in areas of high density as well as regional locations.

However, they can be effectively combated when the attention moves away from building houses to building communities. The obsession governments have had with building roof space to combat what has been widely accepted as a fundamental shortage of housing (something attested by our low vacancy rates across most states of Australia) has lead to an over supply of poorly designed accommodation, whether it be high-rise apartments, or endless rows of house-and-land packages.

We need to provide family accommodation, which we simply can’t keep doing in already overpopulated inner-city suburbs – therefore going outwards is not an option, but a necessity. However, unless we facilitate community needs vital for emotional health, we’re going to end up spending large amounts of money combating stress-related diseases such as obesity, which have nothing to do with proximity to a local gym or swimming pool.

It’s worth looking at a few places that have successfully found a solution to this paradox. In various studies that have been conducted across the country, certain suburbs have been named “the happiest place in Australia” – and they are not located inner city, with gyms and pubs on every street corner.  Results include Wagga Wagga and the wider Riverinain NSW, and Mayo in South Australia. Both these areas have not proven stress free, as recent flooding and loss of housing will attest, however residents are judged happy and consequently healthy because they have a relationship with their neighbours.

Within the suburb are community facilities such as religious meeting places, local festivals, good schools, parks, play centres and so forth – more importantly, their society has an element of autonomy, where residents take the initiative and encourage involvement in local activities. Their happiness has nothing to do with income but everything to do with their connection to others.

Therefore if we’re going to keep building outwards, it’s vital we invest money at the same time into infrastructure that nurtures community involvement and provide local residents with a say in what’s developed. You can’t do one without the other – and there is no advantage waiting until an expensive government report can prove the viability of providing a train line, school or leisure centre. The return on infrastructure investment is never easy to prove on paper but then, happiness economics isn’t about money, it’s about people – and when employed correctly, it will nurture a growing populous who will prove less burdensome on the economy over the long term.

It’s not a new concept: Aristotle, Thomas Jefferson, and more recently great religious icons such as the Dalai Lama have put the pursuit of happiness on equal status to other revolutionary concepts such as liberty, democracy, and economic health.  However, let’s be clear about this – we don’t need to pursue happiness, we have it right there in the people surrounding us. Community involvement is the key, and high priority when assessing a property’s investment potential. As Rabbi Jonathan Sacks once said, “If I have power and money and give some to you I have less, however if I have love and happiness and give some to you, I have more.” As for the home buyer and investor, the lesson is obvious, you don’t buy a house, you buy a location and consequently a lifestyle – a happy community will increase the potential of your property investment two fold, and an emotion that should never be discounted.

Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.