Is Sydney full??

Discussion in 'Property Market Economics' started by DowntownBlock, 9th Oct, 2017.

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Is your city full?

  1. My city is full

    21 vote(s)
    30.4%
  2. My city is not full

    31 vote(s)
    44.9%
  3. I don't know / care

    17 vote(s)
    24.6%
  1. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    The infrastructure ‘mini boom’ coming to the rescue as property eases


    'Just what the doctor ordered': Here's what will replace the property boom


    "Other sectors and road work further down the pipeline will easily cover the risk of a sharper housing downturn than we expect and add to growth." Macquarie analysts

    "Macquarie analysts recommend equity investors pivot their portfolio to engineering and planning stocks, such as CIM, LendLease, Boral, WorleyParsons and Downer EDI – all are infrastructure stocks with an “outperform” rating from Macquarie."
     
    Last edited: 17th Oct, 2017
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  2. scienceman

    scienceman Well-Known Member

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    Haven't you heard of the Blue Mountains? Then we have national parks to the North and South (or do you wish to turn them over to apartment developments as Harry Trigoboff suggested) and of course the ocean to the East. It's also very easy to hand wave about 'better infrastructure and planning'. PS: immigration is set by quota by the Federal Government, it is something we can change with a stroke of a pen.
     
  3. euro73

    euro73 Well-Known Member Business Member

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    Sure have. They aren't separating Sydney from Goulburn last time I checked though, which was today... I spent the day in Leura and Katoomba... didnt see any "Goulburn" signs :)


    Yes we do. I believe you are agreeing with me, because I already mentioned Sysney's geographical constraints as one reason its prices are higher than Melbourne's . But there's plenty of land in the corridor between Sydney and Goulburn which isnt National Park. There just isnt any infrastructure servicing it .

    I don't really get what you are trying to argue in your post. You seem to be agreeing with me yet arguing I'm mistaken.



    Yes it is. And I'm standing here waving - HARD! Various Governments of all shapes and sizes and persuasions have failed Sydney miserably for rail infrastructure in particular, for decades.



    Here's a link that might be of use Google Maps

    That area between Bowral and Goulburn...lots of space. No parks :)
     
  4. scienceman

    scienceman Well-Known Member

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    That's probably because you were having it both ways, ie

    "I don't believe so... I believe it will just continue to get more congested, like any truly big , sprawling city does. It has geographical challenges that no other Australian city of its size ( Melbourne )"

    then you said:

    "Sydney has plenty of room if you get serious. And it could spread towards Goulburn without hitting waterways or mountains".

    Also why aren't the Blue Mountain a barrier between Sydney and Goulburn and how can you say there are 'no mountains'. In any case why would you want to turn Sydney into a mega city?

    Talk of 'better infrastructure' is just hand waving. Even if our politician were up to it this doesn't avoid the financial constraints.
     
  5. euro73

    euro73 Well-Known Member Business Member

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    There are no reasons mountains or national parks prevent the release of vast tracts of land beyond Campbelltown, and heading towards the Southern Highlands and eventually as far as Goulburn. I refer you back to Google Maps above.

    There arent any financial constraints where infrastructure is concerned either, only political constraints. Australia could easily have issued 20 or 30 year bonds at less than 2% - ie inflation a year or two back and raised hundreds of billions of productive debt at essentially zero cost, to build much needed projects. I suspect if you had been in charge of the bridge instead of Bradfield, we'd have ended up with 1 lane each way.

    You're on a site where income to debt ratios of 6,8,even 10 or 15 times income are accepted, or even embraced because the debt is being used towards productive outcomes. Yet we ridicule or punish any politician who might dare take on productive debt. I'm not the one having it both ways sir; Australians are.

    So you clearly believe Sydney is full. I do not. Thats cool... move along
     
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  6. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    Couldn't agree more a wasted opportunity, the IMf and many prominent economist's have made this same argument for some time.
     
  7. scienceman

    scienceman Well-Known Member

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    To what end should we release vast tracks of land to the west for urbanisation? Why not just leave it as productive farmland? And what are all these people going to do for jobs?

    How do you work out that 100's of billion in debt is zero cost? Even if the interest is low the principle still has to be repaid. And with our rate of population growth spending billions (estimated 30 billion a year) just sees us stand still in the face of population growth.

    Do you really think the high debt ratios you refer to speculate on residential property is 'productive'? I would have thought making things in factories or our mining and agricultural industries and selling to the World would be actually be productive and help pay our way in the World.
     
  8. scienceman

    scienceman Well-Known Member

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    They might have said we could be spending more on infrastructure but I doubt they would say we can raise 100's of billions through issuing government bonds with no costs or negatives:


    http://www.investopedia.com/articles/markets/080816/can-infrastructure-spending-really-stimulate-economy.asp


    One chief problem with the theory of infrastructure spending is that it ignores so-called "Cantillon effects" for the relative change in different prices as the result of new money entering the economy. Since new spending increases prices and demand in some areas faster and more deeply than in other areas, it has the side effect of misdirecting production away from areas where private citizens might voluntarily choose to dedicate their money. Essentially, the economy trades off a short-term reduction in unemployment for a long-term misallocation that produces higher unemployment.

    Contrary to what the original theory stipulates, there are likely very large opportunity costs and implementation costs associated with infrastructure spending. Since governments do not produce anything with a calculable market value because their revenues, or taxes, are independent of consumer valuations and therefore blind to any real economic feedback, there is almost no way to know if general infrastructure spending is the best use of resources, let alone any specific project for a road, bridge or highway. It is far more likely that resources are put to more productive use if made through private voluntary transactions because of the effective feedback loop inherent to markets.

    To the extent that infrastructure projects are financed through immediate taxes, the private economy immediately shrinks by at least a corresponding amount. If they are financed through government bonds, then current capital markets experience crowding-out effects and other financial assets become more or less expensive than they otherwise should be. Later on, when those government bonds are paid back through higher taxes or higher inflation, the private economy loses again.
     
  9. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    Tottally agree.

    Also agree, but these endeavours are also reliant on first class infrustructure, without it you deter investment and create inefficiency. And with inefficiency business costs rise and are passed through to the consumer. The multiplier/flow through of this is a drag on GDP as the US is currently experiencing :

    The Massive Cost Of America's Crumbling Infrastructure [Infographic]

    Yep for sure, this is ultimately the most efficient mechanism. But with infrustructure the economic benefit is spread to a large multiple of recipients, thus not making the initial investment or business case viable to a singular private entity.
     
  10. scienceman

    scienceman Well-Known Member

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    I'm not against better infrastructure, but I would thought there would be a better chance of that with a stable population, with the rapid population growth we have now huge sums have to be spent just to stand still. Also export industries benefit from a low dollar. It is quite high at the moment and this is not disconnected from our high population growth and high borrowing.
     
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  11. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    Yeah for sure, there is a saturation point to expanding population beyond the capacity of the current infrustructure. Where that point is, i dont really know as i dont live in sydney. But if thats the current case, this comes back to poor planning/investment by state/fed government.
     
  12. scienceman

    scienceman Well-Known Member

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    Well it's more an ongoing problem rather than a saturation point. High population growth creates a deficit in infrastructure. It's not as simple as hand waving for 'better planning' or 'more infrastructure' as I though I have shown. Indeed one might say that running a high population growth is of itself poor planning. It's not like there aren't other problems like a slack labour market or pressure on the environment.
     
  13. Kangabanga

    Kangabanga Well-Known Member

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    Wouldnt the gov have problems selling the bonds if they issue to much?

    Debt is debt , calling it good or productive doesnt make it any better. We still have to tackle the budget deficit problem. Besides our infrastructure projects often end up overbudget and overdue, wheres the productivity in that?

    Imho sydney is overfilled considering it was built for only like 2 milliin plus pop but no where as bad as chinese or indian cities, now those are full big time.
     
  14. euro73

    euro73 Well-Known Member Business Member

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    They wouldnt have any issues getting all that debt sold. Australia has extremely low Govt debt as a % of GDP, by world standards.

    Anyway, it will never happen... and visionary infrastructure like high speed rail, which would relieve population stresses in Sydney and Melbourne wont happen either...

    So rather than developing Goulburn or Bowral or Wagga and linking them by high speed rail, Sydney will continue to build lots more medium and high density around existing heavy rail corridors and traffic will eventually reach Jakarta levels.
     
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  15. scienceman

    scienceman Well-Known Member

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    Yes the bond holders have to get their money back, so the Government will have to either raise taxes or print money (which can increase inflation). So both are a cost to the private sector and the economy. On top of that the government is not all that good in spending wisely/ picking winners (think pork barrelling). Also there is an opportunity cost, ie borrowing that much money crowds out other investments which might be more productive.
     
  16. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    Yes unfortunately there has been many a footy oval built to win an election.
     
  17. scienceman

    scienceman Well-Known Member

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    High speed rail is hugely expensive and the cost to the government purse could be spent on many far more socially worthy projects. Usually it is talked about for Sydney to Melbourne so the patronage will be mainly business travellers who can pay their own way. I doubt there would ever be the population or patronage to justify having one extending to inland NSW. If it stops at too many country towns it is no longer high speed. And it's really just trying to replace one form of travel (air) with another form. And air travel is competitive while HSR will be a monopoly.
     
  18. Simon Hampel

    Simon Hampel Founder Staff Member

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    While I don't think the economics will work that well for travel between capital cities - you are correct that air is arguably the most effective option here given the distances involved in Australia ... the same can't necessarily be said for travel between our larger regional centres and the city.

    There is also little benefit to helping Sydney's population squeeze by focusing on travel between capital cities when we have smaller cities which could potentially grow to become larger regional centres (availability of water being the main limiting factor of course).

    Small scale air travel is quite inefficient (no economy of scale) and ticket costs are high as a result.

    High speed rail between major centres and the city would hopefully provide a more cost effective means for people to travel these longer distances and with many people able to work remotely most of the time, they wouldn't have to travel every day - perhaps once a week for meetings.

    The problem we have in Australia is that our population is incredibly urbanised - one of the highest percentages in the world I believe, given we have only 5 or 6 cities containing the vast majority of our population with each over 1m, then we have several centres with figures around the 500K mark which are generally satellites of the larger cities, but then very very few regional centres with more than 30K - 50K population.

    This does make it difficult to justify high speed rail when the population base being served is very small - there would need to be a concerted effort to actively grow those centres.

    66% of our population is contained within our 6 largest cities and 80% of our population is contained in our 26 largest - source: List of cities in Australia by population - Wikipedia

    upload_2017-10-18_13-40-54.png

    Higher speed train travel between Newcastle/Maitland and Sydney would be a better investment - make a daily commute an easy choice for many people. Wollongong is another possibility, although the terrain does make it more difficult. Goulburn is too small - only 23K population - better to just go for Canberra/Queanbeyan. Dubbo (37K), Bathurst (36K) Tamworth (41K) and Orange (39K) are all likely too small unless you could serve all of them (kind of defeats the purpose of high speed trains though) and they have questionable water supplies to support significantly larger populations. Perhaps better to just run up the east coast where you pick up Newcastle/Maitland (436K) and then potentially Port Macquarie (46K) and Coffs Harbour (70K).
     
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  19. Gockie

    Gockie Life is good ☺️ Premium Member

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    I was watching megacities on TV last night and it was about Moscow. A trip that with traffic flowing freely might take 45min takes one commuter about 1.5+ hours each way I think to go to work... just way too much traffic. People love to go in their cars though rather than take alternatives.
     
  20. euro73

    euro73 Well-Known Member Business Member

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    Thats about what it takes for someone living in Campbelltown to drive to the Sydney CBD ....