Every few years
The Economist magazine writes a story about how property in
Australia is overvalued compared to other countries – or something to that effect. Comparing Australia with other countries is like comparing apples and oranges. Australia is just so different. But this difference creates opportunities for investors that play the long game. Let me explain.
Big country and not enough taxpayers
I recently spent a few weeks travelling around France. It is so easy to get around. Its roads are in very good condition and the trains are fast, efficient and on-time.
It is easy to overlook that France would fit into Australia 14 times and its population is over 3 times more than Australia (25 million versus 76 million people). On average, there are 122 French people per square kilometre of land. In Australia, it’s a measly 3 people per square kilometre (and in the USA, 33 people).
In Australia, we have too much land and not enough taxpayers to fund the construction and maintenance of adequate infrastructure. Therefore, in order to access good schools and universities, diverse employment opportunities, health facilities, amenities and lifestyle benefits, you must live close to or in a capital city. That’s why 60% of Australia’s population live in either Melbourne, Sydney, Brisbane or Perth. Whereas only just over 3% of France’s population lives in Paris. Living outside of Paris (in say Lyon or Toulouse) isn’t a big disadvantage. (BTW, I haven’t selected France for any particular reason – just using it as an example)
Australian federal and state governments have tried to promote regional centres such as Newcastle and Wollongong in NSW or Geelong and Bendigo in Victoria to take pressure off capital cities. However, they just cannot compete with the large capital cities.
Only solution is a massive infrastructure spend
In my opinion, the only way the Australian government will solve the housing affordability challenge is through embarking on a massive infrastructure spend. Improved public transport, fast trains, better roads are some of the things that Australia needs. Essentially, they need to make it easier to live 30km to 100kms away from the CBD by reducing travel times.
For example, trains in France travel at speeds of up to 300km per hour. That means a train could travel from
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