Sydney, we need to talk. You have a problem and I think I can help.
Recently my wife and I visited your fair city for a weekend, guests of some friends who were being put up in Glebe while they worked on a TV production. They were staying in a decent little two-bedroom flat in a ’70s yellow brick complex, a bit damp and dark but close to the harbour with a water view from one end of the balcony. Nothing really special besides the renovated kitchen and bathroom, which were done in a ‘my, didn’t they make clever use of this small space’ rather than a ‘wow, this should be in a magazine’ kind of way.
On our first night, as we walked into the CBD, sucking in the city buzz we both miss, we talked about how nice it would be to have a similar place of our own. We could visit a few times a year, see some shows and eat at a few nice restaurants while the rest of the time we could rent it out on AirBnB, maybe even turning a bit of short-term profit on our long-term investment.
We spent a pleasant few hours fantasising about the life we would live, enjoying the best of both worlds, relaxing green space on the coast and city glamour. Until later that evening when our hosts revealed, in that conspirational, gossipy, almost naughty way we discuss the value of other people’s real estate, the value of the flat we were staying in.
One point two million dollars.
I can hear many of you musing almost out loud: “Well, 1.2 million for a place in Glebe, close to the harbour, renovated kitchen and bathroom, water views, that’s a pretty good price”.
But no, it isn’t. It’s ridiculous.
As I lay in bed that night, listening to someone in the flat above me using the toilet, I thought about the first million-dollar home I had ever visited. It had an indoor pool. It had a sunken pit full of giant cushions in the living room. It had five bedrooms and a football field for a back garden. Granted, this was over 30 years ago, but do we really need to accept that the same amount now buys us a place where we can hear our neighbours pee?
The question of why was front and centre in my mind as I sat beside the harbour the next day, looking across at the office towers of the city. What made a dingy little flat, the only redeeming feature of which seemed to be proximity to a body of water you would cringe at dipping your toes into let alone swimming in on a hot day, worth so much money?
The answer was of course staring right back at me. Jobs.
With their easy access to jobs and other commercial opportunities in the CBD, the residents of Glebe and other inner city neighbourhoods have a distinct advantage over the far flung millions who also call the city home. The extra money they spend to live where they do buys them the privilege of not sitting in traffic for hours. It buys them time: time to spend with their families and friends, time to surf and go to crossfit classes, time to sleep in and cook nice meals and all those other important things in life — the things that aren’t work.
That desire to create time and space and to make our lives better as a result is what is really at the core of the outrageous escalation in real estate prices. It’s not foreign buyers, it’s not institutional investors. They are only reacting, naturally and correctly, to our very human desire to do what we think we need to do to improve, a big part of which is to physically position ourselves to take advantage of the best opportunities.
But here’s the thing. Here’s where it all breaks down. Here’s where I can help.
The vast majority of people who flood the CBD each day, who come in by train, ferry, bus or car and make their way up the towers, down the hallways and to their desks share a secret. Even if they are not conscious of it they know it in their hearts and they certainly will once I say it out loud. The secret is that they don’t need to be there.
That’s not to say that they are not being useful. They will sit at their desks, in front of their computers, talk on the phone, attend video conferences and conduct very important business. Many of them will play a crucial role every day in keeping the commercial blood of our society pumping through the nation’s arteries, but they don’t need to be there — they could be anywhere.
Modern business practice has already outgrown the expensive and expansive steel and glass skeletons once so vital to keeping everything together. Today’s technology allows for a corporation to be run as easily from a corner table in a café as it is from a corner office with harbour views. That’s the first sign that the value of that office space will inevitably decline. For an entire generation of people for whom the idea of owning a home is somewhere around the same level of possibility as one day taking a space flight holiday, this can be a real advantage.
Living in a closet in Newtown is great while you are young, on your own and working as a barista while trying to get your online graphic design business up and running. But, well, biology. One becomes two and then maybe three or more and you start to need space. While it may seem that your only options are staying where you are, paying out a fortune in rent or disappearing into the suburbs to pay out a slightly smaller fortune, there is another option.
My wife and I bought our first home just over two years ago, something that on current trends most people under 40 will never do. We have about an acre of land in a beautiful area, a 15-minute drive to the beach. It was a bit derelict when we bought it but that was fine, we got to renovate and put our own character into it. All up, including renovations, we paid $350,000.
Compare that with $1.2 million for that dark two-bedroom flat in Glebe. To put the difference in perspective, we could take 85 ultra-luxury $10,000 holidays. I could park three Ferraris in my driveway. I could buy one half-decent boat (boats are expensive).
I know, I know, location, location blah blah blah… but I’m not in the middle of nowhere. I’m close to a small town like many others up and down the East Coast and scattered across the country. We have cafes, restaurants, markets, music festivals and art galleries. We have good schools and sports clubs, golf courses, surf breaks and fishing spots. We have a sense of community, something that often fails to take root in the harsh anonymity of city life.
What we also have is a great need for new energy and room for new ideas to grow. Always wanted to open your own café? There are spaces in the middle of town where the rent is a fraction of what you’d pay in the city. Want to spend your days making organic artisan peanut butter? Plenty of markets close by to sell at and small factories to set up in once your brand takes off with the hipsters. Run an online business trading knitting patterns for dog sweaters? Wouldn’t it be great if you could do it full time rather than having to work retail to make ends meet?
What we don’t have is the buzz, the action and the endless possibility of the city. But honestly you get over that pretty quick, especially as another thing we don’t have is traffic. It’s actually quite amazing how much your underlying stress and anxiety levels go down when traffic is removed from your life. And if all else fails and I do need a fix there are several cities I can be in the middle of in 90 minutes, either by car or plane.
It is one of the great tragedies of our time, for now still unrecognised by most of those who will feel its impact, that an entire generation will be priced out of home ownership in our cities. For every Yin there is a Yang, however, and the flipside here is the opportunity this generation will have to relocate away from cities to less expensive housing options in regional areas due to the impact of technology and accessibility of online work. Like any opportunity, those who recognise it first and get in early will benefit the most.