Expect the Unexpected

When I first started in Real Estate we were awaiting the final connection of the F3 Freeway (now the M1 Motorway). Being new to the Commercial Real Estate world, life was about to teach me another lesson.  The hype from everyone at that stage was about the number of businesses soon to be relocating up here. This freeway link would supply the Sydney market with cheap land and buildings to relocate!

That year I shifted 14 businesses back to Sydney and 2 up to Newcastle and those two would have come anyway.  Business found that the freeway enabled them to service Newcastle from their Sydney warehouses. Thus they shut the doors up here and many more down sized their Newcastle facilities.

When it comes to making the decision to locate here, freeways matter little.  What we suffer from are ‘bedroom decisions’ – not ‘boardroom decisions’.  We can convince directors and senior management that this region makes economic sense, but when they head home and tell their partners they’ll be moving, the game changes.

So what I learnt was to expect the unexpected.

Thinking about this; what changes will the Hunter Expressway bring to the Hunter?

Will the bedroom decision add to the easy freeway linkage? Will it have the effect on Singleton and other towns that the F3 had on Newcastle with businesses moving.  Maybe to where labour is more plentiful?

Will it add pressure to housing in the lower Hunter with families locating closer to the coast and lake whilst still working in the mining industry?

One thing is for sure – it will cause something to happen that none of us are expecting.

If this influx of people with well paid jobs occurs then suburbs near the coast will see prices rise. By how much depends on the size of the shift, and if the shift occurs at all.

I am concerned that despite the hype from agents & economists we are approaching the point where housing is not affordable without wages growth.

For example, in Newcastle & Lake Macquarie.

That leaves the average family just $76.90 per week for incidentals, clothing, restaurants, presents, holidays and other discretionary retail. What happens if interest rates rise?

So for house prices to rise further, those coming into the region must be above average wage earners. And for our economy to grow the workers moving here must be 20 – 55 years of age (the age when people are spending & not accumulating for retirement).

We need jobs & we need younger people if we are to maintain this region. That’s means we need the second airport for Sydney located here.

Editorial JPEG (Small)

Steven Dick
Director Raine & Horne Commercial
Newcastle

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