The events that caused the collapse of Rome and its empire in the 5th century AD were many and varied, but one trigger was a change in social values with greater emphasis on individualism and wealth accumulation, which contributed to a population fall.
We are seeing the early danger signs of the emergence of a similar trend in our largest city, Sydney, which, if allowed to continue, could set the city on a Roman path.
Melburnians, like myself, who make such statements will, of course, be accused of being parochial, but Melbourne has its own set of problems which means the nation must have a prosperous Sydney.
And I raise the Sydney alarm after talking with the Sydneysider who, in money terms, is by far the biggest beneficiary from a Roman style Sydney – Australia’s largest apartment owner, Harry Triguboff.
Like other Australian and global cities, Sydney has a chronic shortage of dwellings.
Unless the issue is tackled in a meaningful way overtime people will stop coming to Sydney to live, the birthrate will fall further and there will be an exodus with all the Roman-style ramifications that population decline delivers.
But Sydneysiders who have a big part of their family fortune in dwellings are increasingly understanding that if the supply of dwellings is constrained, then the value of their properties will rise.
That callous viewpoint is not widespread, particularly as politicians on both sides are calming those who might become alarmed by constantly announcing ambitious plans to overcome the shortage.
But most of the plans can’t succeed because to prevent the required dwellings being built, the politicians also foster enormous bureaucracies including endless committees that are backed by local councils to set complex planning and building rules thereby creating long delays to make development uneconomic.
Triguboff describes it this way: “The housing situation consistently deteriorates. Supply drops, demand rises, rent and prices rise.
“Whichever government is in power, we are promised greater supply. This does not happen. It drops. Whichever party is in power, the opposition is quiet on this issue. That is what their political advisers tell them to do. And the two parties do it.
“This has been going on a very long time. Basically, both parties are the same. And ministers of planning don’t dare to do something different.
“Ministers who promise dreams must be asked to prove their figures. In the meantime, the builders have gone broke and cannot deliver when they have no money
“But the important result is that prices and rents go up. And people wanting a dwelling are not helped by banks giving minimum assistance and the Reserve Bank slavishly talking US policy on rates. We can’t have more people than houses. Eventually, people will stop living here in the same numbers and the migrants will come in lesser numbers,” he said.
Of course, many in Sydney and Melbourne want their cities to shrink.
Meanwhile, like most apartment developers, Triguboff, has pulled out of buying Sydney apartment development land because of the complexities of getting permission to build an economically viable apartments.
Most of the other developers have also shut down after suffering big losses. Sydney geography means that it is impossible to solve the magnitude of its housing shortage using cottage developments that are long distances from the CBD.
But rather than solving the problem by simplifying rules, containing the power of local councils and dismantling the bureaucracies, the politicians’ latest plan is exactly that – cottage developments.
It is high cost and while it might help on the margin in Sydney at least, the shortage is too great. The only true solution is a streamlined apartment approval process.
But large numbers of Sydney property owners do not want that to happen, either because they don’t want more apartments in their communities or because they want the value of their dwellings to continue to rise. Bankers love rising prices, but lower building rates curtails their business.
Over the last half century, most apartment developers sold the properties they built. While Triguboff sold large quantities of apartments, he held back many of which he now rents, including serviced apartments.
Accordingly, as the largest apartment owner in Australia, the rise in prices and rents makes him the biggest beneficiary in the city from the current policies of both political parties.
But once high personal fortune levels are achieved, additional wealth almost becomes academic and if the politicians’ policies squeeze people out of the city and reduce the birthrate then prices will fall. Triguboff’s Meriton operation will go from being the biggest winner to the biggest loser.
In addition, Triguboff’s personal passion is building apartments.
In Melbourne, former Premier Daniel Andrews worked out that the only way to solve the housing problem was to select designated areas near transport infrastructure and allow fast approval in accordance with rules. And he also gave permission for much higher towers to be built if they were available for rent. If implemented, such a policy will change the society but will reduce the housing problem substantially.
But the CFMEU forced the government into the $120bn-plus so-called “train to nowhere” project in the outer suburbs, which would explode the skills shortage so that the housing plans cannot not be achieved. The outcome is in grave danger of being the same as Sydney, albeit it's using different mechanisms
Andrews’ assistant, Jacinta Allan, became premier and naturally there was no change in base policies.
Triguboff says: “The people must demand change. We all love our country, and we must ensure that it grows and prospers”.
That’s not going to be easy to achieve because people owning dwellings carrying high mortgages want dwelling prices to keep rising. And they can achieve that goal by restricting supply.
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