In late January, I went to an open house at a four-bedroom brick California bungalow in Willoughby, one of Sydney’s quiet, northern suburbs. The house, staged with contemporary Australian-style furniture from a shop that rents it by the week, was attractive but unexceptional: no view, a back yard too small for playing cricket, a narrow pool that wouldn’t allow kids much room to roam, and a main bedroom in a converted attic. The real estate broker told me that he expected the house to sell at auction for about $4.4 million ($3.1 million U.S.). Such an exorbitant price for an otherwise modest house explained my presence there that day, not as an interested buyer but as a reporter investigating a question that preoccupies Sydney residents: why is property so expensive on this huge, isolated, and sparsely inhabited continent?
Sydneysiders are obsessed with property. They discuss it and read about it more than any other topic, including the weather. Real estate forecasts routinely make the front page, and home improvement projects, often extensive, are so common that a shortage of builders and a slow permitting process mean they can take years to complete. To be sure, real estate values worldwide have increased because of the pandemic. The average home price in the United States, for example, rose 19 percent in 2021, to $408,100. But the market in Sydney, driven by injections of money into the economy by the central bank to stave off recession, has elevated the city into the ranks of the world’s most expensive places to live. Last year, according to Domain, Australia’s equivalent of Zillow, the median home price in Sydney rose to $1.6 million ($1.1 million U.S.), a 33 percent increase over 2020. In Warriewood, a laid-back beachside suburb, prices soared in excess of 50 percent.
Sydneysiders understand that unrestrained prices are a threat to social mobility—something on which Australia has long prided itself. Without their parents’ financial support, few young people, even those raised in middle-class families, can afford houses large enough to accommodate children. “It’s a huge problem, both in terms of equity and efficiency,” Peter Tulip, a former economist at the Reserve Bank of Australia, told me. “For what we’re paying, everyone should have an extra bathroom, an extra bedroom, and a shorter commute.”
The curse of good geography, fine weather, and rigorous municipal and state government is to blame. Although Sydney is not the country’s political capital, its human and financial resources make it Australia’s wealthiest and most international city. Melbourne, the nation’s second-largest city, is cold, flat, and wet. Brisbane, to the north, is hot and humid. Perth, on the west coast, is pleasant but isolated. Sydney, by contrast, enjoys average summer temperatures of 79 degrees and mostly sunny skies, with only seven days of rain per month. Equally alluring are Sydney’s gently undulating hills that offer world-class views of downtown, Sydney Harbour, the famous Opera House, and urban national parks. A sliver of harbor seen from a balcony or a kitchen window can add hundreds of thousands of dollars to a home’s value.
Surf beaches also number among Sydney’s most desirable views, but I prefer to see them up close. At the start of the pandemic, when scientists were still learning how Covid-19 was transmitted, beaches in our state of New South Wales were closed. I remember walking along one of the most popular surfing spots, Manly, and looking on in amazement at the clean, empty waves rolling in. The surfing ban didn’t last, and the sport became my primary means of maintaining psychological equilibrium during months of lockdown. It also helped deepen my relationship with my daughter, now 14, who enjoyed trying to catch waves with my help.
In January, I had promised to take her surfing the day after an underwater volcano exploded near Tonga. A British woman caring for rescue dogs there died after being swept away by a tsunami. Warnings were sounded across the Pacific, from California to Japan, and for the first time in my memory, a tsunami alert was issued for Sydney. Local surfers were skeptical: the waves that morning were less than a foot high. Nonetheless, to my daughter’s annoyance, I canceled the outing. Some risks are not worth taking. Instead, we stayed at home in our townhouse, at the end of a nondescript cul-de-sac about 25 minutes from the nearest beach.
In October, after Sydney ended a 107-day lockdown, I considered moving to the city’s most controversial apartment block, the 24-story Blues Point Tower. Australia’s tallest condo when built in 1962, the boxy brown-and-white building on an otherwise empty harbor headland was designed by Austrian architect Harry Seidler, whose modernist buildings helped define Sydney in the 1960s, ’70s, and ’80s. Today, though, Blues Point Tower, with its aging but loyal population, is regarded by many Sydneysiders as the city’s most selfish act of property development—a “depressing blight on a pristine harbour” that should be demolished, said Dominic Perrottet, the state’s premier, or governor, a couple of years ago.
Even so, last November, my two teenagers (my other child, a boy, is 16) and I inspected an apartment on the ninth floor. The kitchen was similar in size to the wardrobe-like cooking space that my then-wife and I had shared in Manhattan in 1999. The laundry was a closet. The oven was broken. But the views! I had long dreamed of waking up to the sight of sailboats racing across shimmering water and impressing dinner party guests with the city’s lights. In Sydney, to own a harbor view is to have achieved a kind of property transcendence, one of the greatest outward signs of success that city dwellers can attain.
Among the famous harborside residents is Australia’s former prime minister, Malcolm Turnbull, who lives with his wife, Lucy, in a large house in Point Piper, a desirable harbor suburb. They liked their waterfront view so much that they decided not to move into the prime minister’s official residence on the other side of the harbor after Turnbull was elected in 2015. Two years later, when Japanese prime minister Shinzo Abe visited to discuss a trade treaty, Turnbull took him for a ride between his two harborside properties in a small ceremonial navy boat. The voyage resonated in Sydney, where cruising waterways is a popular weekend pastime. But Turnbull’s perceived insensitivity to those who can’t afford homes of their own, let alone those with stunning harbor views, has also gotten him into trouble. A well-known radio host once asked him whether his policy approach made it harder for young people to enter the housing market. Turnbull turned the question into a joke, suggesting to the interviewer that he give his children enough money for their deposits. “You should support them, a wealthy man like you,” he said.
Turnbull, a former Goldman Sachs banker, was condemned for his remark, but six years later, the problem is far worse. None of the major political parties, despite an impending election by May 21, have offered a comprehensive plan to make housing more affordable. Only one-third of Australian homes are occupied by renters, so even the left-wing Labor Party, currently ahead in polls, endorses tax breaks that favor owners. Strict limits on where apartment buildings can be located and how tall they can be likewise play a role in driving up housing prices. Desirable suburbs make it difficult for developers to erect tall condo buildings. Blues Point Tower would never be allowed today.
The unavoidable consequence is a loss of socioeconomic diversity in Sydney’s most popular areas. The gap between those who own property and those who don’t is expanding, and as the city becomes economically richer, its society grows poorer. “Once upon a time, if you lived in Sydney and you were a nurse, a teacher, or a police officer, you could pretty much afford to rent somewhere in the city near where you worked,” Cathryn Callaghan, a senior policy officer at Shelter NSW, a housing lobby group, told me. “These people cannot afford to live in Sydney anymore. We’ve got paramedics sleeping in cars.”
The problem is most acute in neighborhoods close to Sydney Harbour and the Pacific Ocean, including my own in North Sydney. We live a short walk to my kids’ schools and my workplace. The men and women who repair our homes and staff our shops are forced into long commutes from western and northern Sydney. Buying an apartment nearby would likely cost at least $1.5 million. I have looked at properties on and off for the past two years, figuring it would be lovely to live in a home that we owned, but every time I reach the same conclusion: this city is overpriced.
As for renting in Blues Point Tower, my teenagers vetoed the move. The apartment did have three bedrooms, but only one common room, which the kids would have to walk through to access their bathroom. In the 1960s, when Seidler designed the building, siblings commonly shared bedrooms and were not so concerned about their privacy. But 60 years later, teenagers expect more.
So, I’m biding my time until my children leave home. Then I’ll see if I can get into that ugly, selfish building.
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