Would a mandatory five-day working week solve construction’s work-life balance woes?

By Martin Loosemore, Professor of Construction Management, University of Technology Sydney and Suhair Alkilani, Senior Lecturer in Construction Management

Working practices in the construction industry have been labelled a relic of a bygone era – 64% of employees work more than 50 hours per week.

Long working hours can pose significant risks to people’s physical and mental health, relationships, workplace productivity and safety.

Construction is also struggling to attract and retain women. In New South Wales, about one-third of companies with fewer than 200 employees have no female employees at all.

These are serious problems for an industry under pressure to deliver 1.2 million new homes and A$230 billion of infrastructure over the next five years. Clearly, something needs to change.

One proposal is to mandate a five-day week across the sector. On face value, it may seem like common sense. Making the construction sector a more attractive place to work could attract more talent and, by doing so, alleviate other pressures.

Our research questions this assumption, highlighting that without careful design, such a proposal could have significant unintended negative consequences.

Work–life balance

To investigate the potential impacts of a shorter work week on work–life balance, we surveyed 1,475 people and conducted interviews with 111 people from across the NSW building and construction industry. We also examined leading international peer-reviewed studies.

We found that the relationship between a healthy work–life balance and a shorter working week is much more nuanced than the current debate suggests.

There certainly was evidence of unhealthy working hours in some parts of the industry. Of the people we surveyed, 39.8% consistently worked more than five days per week.

We also found 26.1% worked more than 55 hours per week, and 36.7% more than ten hours per day.

But we should be careful not to generalise. Young people, those in relatively junior roles and workers on sites – especially salaried managers and supervisors – were found to be doing the heavy lifting in terms of hours and days worked.

This was especially true on large inner-city commercial, residential and infrastructure projects.

Across all respondents, people worked an average of 50–55 hours per week, and just over five days. More than 60% said they had satisfactory, good or very good work–life balance.

Different needs

We also found that not everyone’s work–life balance will benefit from simply reducing working hours.

For construction workers, this depends on a wide range of factors, such as:

• age

• caring and family responsibilities

• financial circumstances

• how easily a particular job can be done in five days

• personal attitudes towards work.

It’s also not clear whether a shorter working week would increase female participation.

Across men and women surveyed, high salaries were widely regarded as adequate compensation for the high hours worked. Some research has even shown women might be less likely to leave the industry than men.

Our findings suggested women who take on the weight of family responsibilities could be especially disadvantaged, if they were forced to work even longer hours during the week to make up for the lost weekend.

However, most respondents saw the delineation between men and women as increasingly irrelevant and based on outdated assumptions. Most argued that the industry needs to be made more appealing to both men and women.

The industry needs to be made more appealing to both men and women.

Strong support for a shorter week

Not surprisingly, we found strong support for a shorter working week. However, it’s a bit of a leading question.

We found that few people were willing or able to take a pay cut, work longer hours or lift their productivity during the week.

Many people were also worried about potential impacts on their projects, employers and colleagues. Few employers and clients said they were able or willing to absorb the costs of a shorter working week.

Impact on projects

Depending on a wide range of factors identified in our report, the consequences of moving the industry to a five-day week varied.

We found it could increase the time it takes to complete projects by 5–25%, and costs by 0.4–4%.

The current “hard five-day week” model being advocated for the industry – where sites are shut down on weekends – involved the greatest potential costs.

Importantly, we found subcontractors were currently underpricing five-day-week projects by as much as 20%, because they could spread the costs across other six-day projects.

If a five-day week were mandated across the entire industry, this cost increase could be added to the costs estimates above.

The jury is out

The jury is still out on the pros and cons of a mandatory five-day week in construction.

We found that a healthy work-life balance for everyone is most effectively achieved by providing people with greater flexibility and control over when, where, how and how long they work.

If flexibility can be improved for everyone in the industry, then there is no need to incur the potential risks of a mandatory five-day week to individuals, employers and clients of the industry.

If we insist on adopting a five-day week, then a soft five-day week where sites are flexibly kept open on weekends may be the better option.

This article is republished from The Conversation under Creative Commons license. Read it here.

How our regions can help make Australia’s growing cities more sustainable

By Peter Newton, Emeritus Professor in Sustainable Urbanism, Centre for Urban Transitions, Swinburne University of Technology; James Whitten, Research Fellow, Department of Architecture, Monash University; Magnus Moglia, Associate Professor in Sustainability Science, Swinburne University of Technology and Stephen Glackin, Senior Research Fellow, Centre for Urban Transitions, Swinburne University of Technology

Newcastle

The way we organise our cities and regions creates problems everywhere. We’re facing difficult and polluting drives to work, a lack of affordable housing, and urban designs that lead to car dependency and are bad for our health.

For example, poor levels of walkability are associated with higher rates of obesity, hypertension and cardiovascular disease. Parks and greenery are associated with better mental and cognitive health.

Australian cities sprawl. Many suburbs are hard to get to by public transport or cycling and walking.

Our sprawling cities use a lot of land per person. Their resource use and carbon footprints are massive. They also produce huge amounts of waste.

To resolve such issues, government planners should think beyond our capital cities. Australia needs to develop strategies that connect these capitals with surrounding regional cities to create “megacity regions”.

It’s a settlement model that could work better than our big cities do now, making urban growth more sustainable. The emergence of hybrid work, fast internet and high-speed rail favours this form of settlement.

What are megacity regions?

A megacity region, according to the OECD, is a network of urban areas linked to a capital city by home-to-work commuting. Megacity regions connect these urban centres more efficiently to make them more sustainable and productive.

An early example is the Bos-Wash corridor (including Boston, New York, Philadelphia, Baltimore and Washington DC) in North America that emerged around the mid-20th century. Megacity regions are now common across Europe (for example, Germany’s Rhine-Ruhr region including Dortmund, Essen, Duesseldorf and Cologne, and the Netherlands’ Randstad region including Amsterdam, The Hague, Rotterdam and Utrecht). The Taiheiyō Belt in Japan (including Tokyo, Nagoya, Osaka, Hiroshima and Fukuoka) is one of many Asian examples.

How ready is Australia for megacity regions?

The 2019 CSIRO Australian National Outlook explored the question “What will Australia be like economically, socially and environmentally in 2060?” Its modelling showed “stronger regions” created major benefits across transport, health, education, jobs and housing. One scenario involved 16 million people living in regional Australia by 2060, with 10 million in regional cities.

CSIRO concluded that “investing in the growth of regional satellite cities with strong connectivity to those capitals” creates many opportunities. This growth would benefit the regions while easing pressures on the capitals.

The Australian National Outlook 2019 - CSIRO

In recent years, the New South Wales government has developed ideas for Sydney to grow into a Six Cities Region from Newcastle to Wollongong.

The Committee for Melbourne has called for an Australian East Coast Megaregion to boost economic growth and attract foreign investment.

In 2023, the Victorian government indicated a statewide strategy, Plan Victoria, would replace Plan Melbourne.

However, without robust regionalisation policies, Melbourne and Sydney are likely to become sprawling megacities of ten million people or more this century. This will add to the strain on transport, infrastructure and housing.

What makes change possible?

Cities and their central business districts are important for their agglomeration effects – the accumulated benefits of concentrated social and economic activity. But this also often leads to social, economic and environmental problems.

Integrating regional cities into the economic life of their capital cities can reduce some of these problems. It can also produce many benefits, including new and more efficient industries, enhanced communication networks and stronger labour markets.

Settlement systems have evolved throughout history. Walking cities became rail-oriented cities, which became car-based cities. All these models in their day supported a daily return commute averaging one hour (Marchetti’s constant).

Our research explores how new technologies and work practices can enable a fourth transition to the megacity region. The drivers of this change include ubiquitous fast internet, hybrid work and high-speed rail.

Ubiquitous fast internet

NBN broadband data from 2012 to 2021 showed little difference between Melbourne and Victorian regional cities in the uptake of typical residential internet connections. There was a major difference for higher-speed business connections.

Major capital cities continue to act as engines of bandwidth-hungry, information economy industries in Australia. They have more high-skilled workers and higher uptake of fast internet.

Overall, the data reflected that regional cities in Victoria mostly house “population-serving” rather than “producer-services” industries. Fast internet can open up job opportunities, but is not by itself enough to decentralise knowledge industries.

Hybrid work

Working both from home and in the office has become established since COVID. Hybrid work improves sustainability, mostly by reducing car use and road congestion.

Today, only 18% of Australian knowledge workers work “only in the office”.

Not having to go into work every day means knowledge workers can live further from their workplace. This changes the employment landscape in regional centres. Many information economy jobs can be done in non-metropolitan locations where housing costs less.

High-speed rail

Fast rail systems have long been debated in Australia, with various options proposed.

Victoria introduced “faster” regional rail in 2005-06. The populations of urban centres served by these lines have since grown faster than “off-line” ones.

The gap in job growth rates between on-line and off-line centres was greater for producer services than people-serving jobs. The latter are tied more closely to demand from local residents.

Designated growth areas on the outer fringes of Melbourne had much higher population and employment growth rates, indicating that current transport polices have supported urban sprawl. High-speed rail can help urban growth to “leap over” outer suburbs to the regional cities.

What could high-speed rail lead to? In England, the advent of high-speed rail (speeds of more than 200km/hr) resulted in notably higher population growth in on‑line local area districts compared to off-line. The on-line districts, across the board, experienced a stronger shift towards information and knowledge-based industries than off-line ones. Some even outperformed outer metropolitan London districts.

Why is this important now?

Both federal and Victorian governments are preparing strategic plans to guide long-term urban development. Both have issued discussion documents for public feedback.

These documents are long on planning principles but short on mission-scale programs capable of transformative change. This sort of change is now the focus of long-term planning internationally. Land-use planning of megacity regions needs to feature strongly in Australian urbanisation plans too.

We have a once-in-a-generation opportunity to achieve urban development at a scale and in a form that can transform Australia’s settlement system.

This article is republished from The Conversation under Creative Commons license. Read it here.

Making sense of housing policy proposals

By Eliza Owen, Head of Research at CoreLogic Australia

With a wave of housing policy proposals hitting headlines, CoreLogic’s Head of Research Eliza Owen breaks down what these announcements could mean for the market and how effective they might be, covering:

• The Federal Government’s infrastructure funding towards supporting new housing developments

• Victoria Government’s proposed high-rise development zones near metro hubs; and the 12-month stamp duty concession for off-the-plan townhouses and units for any value and any buyer

Cheaper homes don’t make for more homes.

The contradiction at the heart of our housing challenge right now is that more supply is needed to help housing values come down. In reality though, the residential construction sector is still struggling to deliver housing with a reasonable profit margin. For private sector developers and builders, arguably home values need to rise further to support some repair in profit margins, or costs associated with delivering new housing supply need to fall. The cost of buying and holding land, developing it, putting up buildings and financing projects have all increased in recent years.

This means that in order to make new supply work, residential construction needs to be somehow distanced from the pressures of profitability and feasibility.

There’s not one approach to this, but the Coalition has responded to industry groups calling for funding of housing-related infrastructure, such as the connection to water, sewage and roads. Prior to the 1980s, it was not uncommon for state governments to fund this kind of infrastructure in partnership with land developers, which has gradually shifted to the private sector over time. This effective subsidy for the infrastructure costs associated with new housing development should help to reduce the cost burden on developers and support a kickstart of shovel ready projects. A ‘use it or lose it’ condition of 12 months would also help to bring forward commencement of approved dwellings, which according to the ABS sat at around 34,000 in the June quarter of this year (down from a high of 46,000 in the December quarter of 2017, but drifting up from a 5-year average of 32,000).

The Victorian government has also made a move toward upping supply, but the focus is more on infill.

They have announced 50 key transport areas where local planning laws would be overridden to allow high-rise apartment developments of up to 20 storeys near some stations. The question of feasibility also comes to mind: is this the right kind of supply for increasing home ownership. High density unit development in Melbourne was common in inner-city areas throughout the 2010s, but these were largely bought by investors and have not exactly led to prosperity and wealth creation for their owners. For example, in the suburb of Melbourne, CoreLogic data shows unit values are still -8.4% below the record high in May 2017. For millennials having kids and seeking a family home, high rises are also not traditionally a popular option. 2021 census data shows just 1.7% of one-family households resided in units in a nine or more storey block, compared to 82% of one-family households living in a detached house. However, units in established, affluent areas could provide an excellent downsizing option for empty nesters, freeing up more family homes.

Interestingly though, the Victorian state government has also announced an immediate, uncapped 12-month concession on stamp duty for off-the-plan townhouse and unit purchases.

Historic lending data from the ABS shows that the biggest surges in first home buyer activity have occurred during temporary, uncapped buyer concessions, because they concentrate first home buyer activity under the period the concession is available. These included the temporary boost to the First Home Owners Grant in 2008 and 2009, and the HomeBuilder scheme, which was available to all buyers but had strong take up from first home buyers. This actually does serve to improve the feasibility of unit projects in the areas earmarked for upzoning. Even without the stamp duty concession, younger Australians would likely be incentivised to take up unit living because of the cost blow out between houses and units through the pandemic. In September, CoreLogic data shows a $313,500 gap between the median house and unit value in Melbourne, up from $208,500 in December 2019.

Across both the federal and state government announcements heard in the past few days, the common threads are about enabling more housing supply. With housing at the centre of upcoming elections, no doubt more announcements about enabling supply are on the way. But all levels of government need to be careful about getting that supply right if it is going to have take up from buyers. For example, the Coalition’s proposed pause on construction code updates could have implications for the standard of new homes coming to market. The Victorian state government should take heed from the high-rise development of the 2010s, where an effective ‘glut’ in unit supply has brought down prices and rents, but it won’t deliver the same wealth creation as detached houses have for previous generations, especially if quality and size are compromised for project feasibility.

This article was origianlly published on the CoreLogic website. Read it here.

How can Australia make housing affordable for essential workers? Here are 4 key lessons from overseas

By Nicky Morrison - Professor of Planning and Director of Urban Transformations Research Centre, Western Sydney University

Essential workers such as teachers, health workers and community safety staff play a vital role in ensuring our society works well. Yet soaring housing costs in cities like Sydney, Melbourne and Brisbane are squeezing essential workers out of the communities they serve.

The issue is reaching crisis point across Australia. Anglicare Australia yesterday released a special edition of its Rental Affordability Snapshot focused on essential workers in full-time work. Housing costs under 30% of household income are considered affordable. In a survey of 45,115 rental listings, it found:

• 3.7% were affordable for a teacher

• 2.2% were affordable for an ambulance worker

• 1.5% were affordable for an aged care worker

• 1.4% were affordable for a nurse

• 0.9% were affordable for an early childhood educator

• 0.8% were affordable for a hospitality worker.

This trend is creating unsustainable patterns of urban sprawl and long commutes. It erodes workers’ quality of life. It also undermines public service delivery by making it harder to recruit and retain these workers in high-cost areas.

International experience, particularly in the UK where I have advised on similar policies, shows there are solutions to this crisis. These global lessons fall into four categories.

Essential workers face long commutes from home when they can’t afford to live in the communities they serve.

1. Define essential worker housing

Essential worker housing typically targets front-line public sector workers on low to middle incomes. Yet eligibility should extend to support roles, such as ambulance drivers, porters and medical receptionists, who play a vital part in enabling front-line services. They too struggle to find affordable housing near their workplaces.

Conditions of eligibility should also include a cap on household earnings.

The UK experience highlights the importance of providing both rental and ownership options. To keep key worker housing affordable and accessible over time, both types need to be priced appropriately.

Australian cities could adopt similar approaches, by requiring housing developers and community housing providers to allocate affordable housing for essential workers. Prices would be below market rates for both rentals and home ownership for the long term, and not revert to market rates. This ensures stability for public service workers.

2. Financial innovations focused on long-term affordability

Innovative financial models, such as shared equity schemes, have succeeded in the UK. These allow workers to gradually buy into their homes, creating long-term stability.

Shared equity involves the government or another investor covering some of the cost of buying the home in exchange for an equivalent share in the property. Australia could explore similar schemes to provide immediate relief while ensuring sustained affordability for future essential workers.

This approach could build on the Commonwealth’s proposed Help to Buy scheme, currently before the Senate, and existing state and territory shared equity programs. These may need refinement to better serve essential workers by, for example, adjusting income thresholds and eligibility criteria to ensure they qualify. These schemes also need to expand to cover all urban areas where housing affordability is most strained.

3. Leverage planning systems

Countries like the UK have leveraged their planning systems to deliver affordable housing for key workers. In England, planning authorities use mechanisms such as Section 106 agreements to ensure a portion of new developments is reserved for key worker housing as a condition of planning approval.

Australian states could adapt this model, setting targets within existing planning frameworks. For example, they could use Voluntary Planning Agreements to prioritise essential worker housing.

Yet essential worker housing should not displace housing for other people in urgent need. They include people who are homeless, low-income families, people with disabilities, the elderly, those at risk of domestic violence, veterans and youth leaving foster care.

4. Use public land for housing development

The use of surplus public land for essential worker housing has proven successful in several cities, including London, Amsterdam and San Francisco.

Earmarking land owned by the public sector, such as hospital or education sites, is a strategic way to deliver affordable housing near key public sector employers. It also allows staff to travel to work nearby using sustainable transport instead of cars.

Affordable housing has profound benefits

Without action, essential workers are likely to be forced into lower-quality, high-cost housing, shared accommodation, or long commutes from more affordable areas. Over time, these patterns of job-housing imbalances and urban sprawl are unsustainable. These issues are the focus of my current research, particularly in Western Sydney.

The New South Wales government has set up a parliamentary select committee to inquire into options for essential worker housing. It’s bringing much-needed attention to the housing crisis affecting key public sector roles.

Tackling these issues through targeted housing solutions has many benefits. It can help create more sustainable communities, reduce recruitment and retention difficulties for employers and ease the strain on infrastructure and services.

The key takeaway from the UK and other countries is the importance of long-term, sustainable solutions that do not shift the focus away from those most in need of housing. Australia has the opportunity to strike this balance. We need to ensure essential workers can afford to live near their workplaces while not sidelining everyone else in need of affordable housing.

This article was originally published on The Conversation. Read it here.

Before we over-regulate private credit, let’s understand it

By Andrew Schwartz - Qualitas

Andrew is the Group Managing Director, Co-Founder and Chief Investment Officer (CIO) of ASX-listed Qualitas. He has over 39 years’ experience in financial services with an extensive track record across real estate investments, pioneering the alternative credit market in Australia in the late 1990s with a focus initially on mezzanine debt. He is responsible for overseeing the firm’s activities, setting the strategic direction of the business as well as building and enhancing relationships with clients and investors and is the CIO for the firm’s debt and equity funds.

In the lively discussion about the role of private credit in the Australian economy, all arguments eventually lead back to regulation.

Critics of the sector – including traditional lenders protecting their patch – paint a picture of an unregulated free-for-all that leaves Australian investors and borrowers exposed.

This is far from the truth. The reality is that private credit providers and facilities in this country are, rightly, already subject to multiple layers of regulation – all designed to enhance transparency and protect both investors and borrowers.

Private credit is certainly growing rapidly in Australia and shows no sign of slowing.

Around the world, there are enormous reserves of global capital in our superannuation and sovereign wealth systems looking for a home – and a decent risk-adjusted return. And there is the recognition that private credit is a highly credible source of capital, particularly for borrowers or projects with specialised needs.

Private credit can provide product solutions that are more difficult for the traditional lenders to deliver. Because providers typically invest capital sourced from equity, they can allow for more flexibility in the underlying terms as the capital does not have the tension you get with highly leveraged balance sheet structures.

Today, private credit is an important part of our financial system, providing another source of capital into the economy that supports growth, drives competition and innovation, and adds overall liquidity and stability. One of the causes of the 1990s liquidity squeeze was the lack of alternative credit providers beyond the banks and government. If we had another squeeze like the 1990s, borrowers would have a range of alternative capital providers available, beyond the traditional banking system.

Naturally, such an important and growing part of our financial system needs to be well regulated – and it is.

Private credit funds involve a third-party manager securing capital from investors, ranging from retail and wholesale investors, all the way through to superannuation and sovereign wealth investors. These funds provide the investors’ capital to borrowers in the form of a loan. In the traditional funds model, investors contribute their capital to the manager not by way of a loan, but in the form of an equity investment.

Fund managers that raise capital from investors in this way are already subject to strict, multilayered regulatory requirements.

A manger must have an Australian Financial Services Licence (AFSL) and requisite management skill and expertise, which is a regime supervised by the Australian Securities and Investments Commission (ASIC).

They need to register with the Australian Prudential Reporting Authority (APRA) and undertake periodic reporting under the Financial Sector (Collection of Data) Act 2001 (Cth) (FSCODA). The threshold for reporting is typically debt of $50 million.

They must also comply and undertake ‘know your customer’ procedures as part of exhaustive anti-money laundering and counter-terrorism financing obligations overseen by AUSTRAC in respect of both their investors and the borrowers that are lent money.

On top of that, there are additional safeguards in place for retail investors, which require fund managers to have a product disclosure statement registered with ASIC, target market determinations and design and distribution obligations.

If the fund is listed on the Australian Securities Exchange (ASX), continuous disclosure arrangements apply alongside all other companies and the fund must adhere to the ASX Listing Rules. Additionally, it is the norm for institutional fund managers, like Qualitas, to have robust group-wide enterprise risk and compliance systems overseen by a board comprising independent directors.

That just covers investors. What about borrowers?

If the borrowers are for residential mortgages, the manager must hold an Australian credit licence and the borrowers will have the benefit of the National Consumer Credit Code protections. These are the same rules that apply to authorised deposit taking institutions – the banks. In the commercial property sector where Qualitas specialises, the borrowers are large, sophisticated groups with legal and financial advisors.

What about capital adequacy requirements? Private credit funds are not authorised to take deposits (like banks) and do not have the benefit of the Federal government deposit guarantee scheme.

Banks provide a systemically critical function in the Australian (and global) economy but they are highly leveraged institutions that are in the business of facilitating borrowings for others. For every $1 of deposits, banks generally provide $9 of loans into the economy and are generally required to hold $1 of reserves.

This extreme liquidity mismatch is why APRA regulates banks and why Australia has adopted the Basel rules of capital adequacy.

APRA’s responsibility is to protect the financial interests of Australian’s and ensure the financial system is stable, competitive and efficient – and a highly leveraged bank without adequate Tier 1 capital protections presents a risk to all.

Compare the above to investment funds which in Australia are mostly 100% equity funded (no debt) and not a ‘loan-on-loan’ type structure. Such structures are robust due to the absence of debt and do not amplify profits or losses.

One area that I have espoused for a long time is educating wholesale borrowers that not all lenders – outside the trading banks – are alike. Borrowers need to ask their lender some basic questions such as, their capital source, longevity, who is in control in the event of decisions being required. Such disclosure would allow borrowers to differentiate between lenders, and more fully understand the relative risks of dealing with different lenders. Such risks differ between lender liquidity risk and ensuring the borrower understands who controls the relationship is paramount.

Increasingly I am seeing private market funds, including private credit funds taking on leverage in their funds (similar to a mortgage over the fund assets). It is important for both borrowers and investors to understand the risks that these types of loans carry for their investment.

We already operate in a highly regulated financial system, with laws in place to protect investors and society – so before we over-regulate private credit, education for borrowers on the capital nuances of varying alternative lenders is a good place to begin.

This article has been republished with permission from the author Andrew Schwartz - Qualitas. Read the original piece here.

Building companies feel they must sacrifice quality for profits, but it doesn’t have to be this way

By Kerry London Deputy Vice-Chancellor of Research, Torrens University Australia

Barbara Bok, Adjunct Senior Research Fellow, Centre for Healthy and Sustainable Development, Torrens University Australia

Zelinna Pablo, Senior Research Fellow, Torrens University Australia

The Australian construction industry has long been facing a crisis of serious defects in apartment buildings. In the past, alarming incidents such as the Sydney Opal Tower evacuation and the Melbourne Lacrosse fire signalled systemic problems in construction.

The same problem persists today. One recent report shows serious defects in apartment buildings in New South Wales have more than doubled between 2021 and 2023.

As the Albanese government fast-tracks its five-year plan to build 1.2 million dwellings, this number will likely worsen.

We’ve researched the pressures the construction industry feels and how that can result in unsafe apartments, and what can be done to make housing like this better for everyone.

Why are we in this situation?

Serious defects endanger lives, cost building and insurance firms millions of dollars, and put pressure on regulators. Typical responses involve increased regulation, but the lack of change in apartment quality shows increased regulation is not enough. Behavioural and cultural changes are needed.

We found the poor quality of apartment buildings is often the result of deeply entrenched patterns of unprofessional behaviour across the industry. These often arise as professionals face pressures to cut costs in an industry notorious for its low profit margin.

We also found this pressure is exacerbated by aggressive competition, work overload, exploitation and a toxic culture.

As pressures mount, professionals’ decision-making becomes increasingly fraught. For example, many professionals we interviewed largely believe they must choose between profit and quality.

There are no simple answers to this age-old conundrum. However, our study shows a way forward.

What did we find?

Our three-year study funded by the Australian Research Council is the first in Australia to extensively investigate 12 building professions struggling to navigate and resolve this perceived dilemma.

Teams from four Australian universities conducted desktop reviews, analysed professional codes of conduct, interviewed 53 professionals and conducted six focus group discussions. After two years of analysis and model development, we published our industry technical report and presented our findings to practitioners in NSW and Queensland.

We have empirical evidence that shows profitability and quality do not have to be mutually exclusive. We have uncovered powerful, innovative but ad hoc strategies showing businesses can reconcile both.

One builder we profiled, a multinational company and a market leader in apartment construction, took a pioneering approach to this dilemma.

For many years, the company’s strategy was to build as quickly and cheaply as possible to save money. However, these savings were ultimately lost because they found they had “[…] made some money at the time, but we basically spent it all fixing things that we didn’t build that well”.

The company re-examined its business model and developed a new strategy that reconciled profitability, quality and professional behaviours.

The company analysed where the majority of their defects arose from and there were five key areas including:

• balcony waterproofing

• shower construction and waterproofing

• fire wall installations

• penetrations through fire walls

• brick masonry construction.

They then built prototypes of high quality construction for each of these typical building elements. They found their prototypes addressed defects while also integrating different technical standards.

The company then informed their clients, subcontractors and suppliers that “this is how we will build from now on”. Over time, it became apparent their strategy supported skills training while also improving long-term financial sustainability.

These prototypes are now showcased at a centre in NSW. Subcontractors, architects, engineers, designers, professional associations and other supply-chain actors regularly visit.

The company now conducts training for quality based on these prototypes and reports that since the establishment of this strategy, defects have been reduced by 85%.

Our empirical evidence shows these strategies drive quality and long-term financial sustainability.

Safer homes nationwide

This strategy does not have to be limited to a few large companies.

In our report, we provide a plan to ensure safer, more financially sustainable building practices can be rolled out across the industry. It relies on collaboration across sectors.

Best-practice companies in each state, like the one in NSW, would come under a national umbrella. Commonwealth and state governments would initiate the effort by identifying the best examples in different states. Together, they could focus on design, construction quality and on innovative materials, standards and ways to build safely and cost-effectively.

With positive role models to follow, other companies can improve. This would instil a mindset and culture of leadership, accountability and responsibility across the sector. More coherent standards would be embedded across the industry would ensure workers at all levels are no longer siloed.

Education and training organisations would progressively incorporate these new standards. Over time, the workforce would rebuild knowledge and skills that are perceived to have largely disappeared.

It’s important to ensure clients help drive this too. By mandating or incentivising companies with safer supply chains, there’s a commercial imperative to do better.

Professional associations also have a role to play. They can support these efforts further by creating resources and advocating for best practice.

Making apartments safer requires a shift in the thinking of the entire construction industry. There are inventive ways to align quality with profitability. We must challenge the assumption that they are always irreconcilable.

This article was originally published on The Conversation. Read it here.

Econosights: Indicators of consumer mortgage stress

By Diana Mousina, Deputy Chief Economist, AMP

Key points

- Traditional concepts around household mortgage stress (based on the share of income households pay on their mortgage) have been less useful guides in this cycle.

- Households have been more resilient to higher interest rates through drawing down upon accumulated savings, using prior mortgage prepayments, relying on the bank of mum and dad and taking on additional jobs. And, the strong labour market has supported consumer wages and salaries.

- Mortgage delinquencies are likely to rise a little further from here but remain low as a share of total loans. But, the probability of large-scale housing loan defaults, forced home sales and large falls in property prices looks low. However, consumer spending is still likely to remain constrained, especially as the unemployment rate rises.

Introduction

The 425 basis point (or 4.25%) increase to the cash rate set by the Reserve Bank of Australia over 2022-23 has been the largest increase to interest rates that Australia has experienced since the late 1980s. Despite Australian households’ vulnerability to rising interest rates because of high household debt and borrowing through variable and/or short-term fixed mortgage rates, households have managed to deal with higher mortgage repayments without a broad-based increase in debt servicing problems (for now at least). We look at this issue in this Econosights.

Australia and high household debt

The average Australian household debt (mostly housing) as a share of net disposable income is currently at 214% in Australia (see chart below).

This remains around a record high and is significantly above most of our global peers. This makes Australian households vulnerable to changes in home prices and interest rates, with the risk of “mortgage stress” increasing if home prices fall and as interest rates are increased or kept at a high level.

Indicators of mortgage stress

Mortgage stress is usually measured by looking at whether households are spending too much of their income towards paying back a mortgage (both interest and principal costs). Historically, most considered this threshold to be around 30% (i.e. if households are spending 30% or more of their incomes on mortgage repayments, then they are in some form of mortgage stress). There tends to be a lot of focus on mortgage stress because if households have trouble repaying debt, this would be negative for consumer spending (which is 50% of GDP) and could result in debt defaults, forced property sales and at an extreme, risk a “financial crisis” and a recession. However, the traditional 30% threshold has not seemed appropriate in the current cycle. The average household in Australia spends 13% of their income on repaying their mortgage on the RBA’s measure which is now close to the 2008 record high. But, this measure is done for the average household in Australia, 37% of households have a mortgage as at June 2020 (with the rest renting or being outright owners) so the mortgage repayment data would look much higher for those with a mortgage and would exceed the 30% mortgage stress level for many households, especially those who have taken out loans in recent years (around 64% of housing loans outstanding have been taken out in the last three years).

The term “mortgage stress” has also become overused in recent years and seems to be being used interchangeably for consumer concerns around cost-of-living challenges which is reflected in consumer sentiment surveys that remain around recession-like lows. Consumer sentiment based on status of home ownership (renting, mortgagee or owner) is low and relatively similar across the groups – so everyone is feeling unhappy! Other surveys like Roy Morgan surveys indicate that 30% of Australia consumers are “at risk” of mortgage stress and 19% are “extremely at risk” of mortgage stress with this measure tracking the proportion of households paying a certain proportion of their income after tax on their mortgage (the threshold is 25-45% depending on income and spending) - see the chart below. However, the experience of Australia over the past two years based on mortgage arrears and housing listings does not suggest that there has been significant mortgage stress.

Another indicator of mortgage stress is mortgage delinquencies, which is the share of outstanding loans that are overdue on their mortgage. Delinquencies are just over 1% of total outstanding loans, which has trended up slightly over the past two years but is still low and below the ~2% level during the Global Financial Crisis in 2009. This lines up with the banks reporting more hardship calls. The pandemic broadened the availability of financial institution support plans (like changing to interest-only and increasing the term of the loan) which are supressing delinquencies.

The share of households in negative equity (where the value of the dwelling is worth less than the purchase price) is also a risk to watch because it could result in a negative wealth effect (which is either realised or unrealised depending on if you are forced to sell your home), a rise in “mortgage prisoners” which are the borrowers trapped with their current lender at an uncompetitive rate because refinancing is not possible as the value of the dwelling has fallen and an increasing risk for the banks if they are forced to hold more capital. There will be pockets of households that are in negative equity depending on the dynamic of the housing market but nationally, home prices are going up which reduces the risk of negative equity (and are 7.9% above their year-ago levels across the capital cities). On the RBA’s measure, only around 1% of loans are in negative equity. The RBA have said that a housing crash (with prices falling by 30%) would see the number of loans in negative equity increase to around 11%.

Besides these traditional indicators of mortgage stress, there are also other signs of consumers adjusting the environment. Multiple job holdings are up at 6.8% of total employment (near a record high) but could also reflect the strong labour market. CoreLogic data on housing listings also shows a pick up in recent months, which could suggest more stressed sellers. Consumers have been switching to cheaper brands and cutting down spending, with annual retail volumes negative for the past five quarters to June.

Why have consumers been resilient and can it last?

The average increase to a consumer mortgage in Australia from the lift to interest rates since 2022 is an additional $14K/annum based on the rise in outstanding mortgage rates. So how have consumers managed to service this additional cost? There are multiple reasons. Consumers have been drawing down on accumulated savings worth around $240bn at its peak (also evident in high mortgage prepayments), utilising the bank of mum and dad (and grandparents!) to pay for essential expenses, accessing government support through energy and rent rebates which were available to some low-income households last year. The energy rebate was broadened out to all households from 1 July and the Stage 3 tax cuts also started (worth around $2K for an average household). And of course the unemployment rate has remained below its pre-COVID average has helped to support consumer incomes. Bank lending standards have remained sensible (see chart below which show low high-risk lending in Australia) which also has kept risky lending down (see the chart below).

However, some of these consumer supports now look weaker. Accumulated savings for young to middle aged households who are most vulnerable from high interest rates are likely to have been fully utilised by now and the unemployment rate is likely to increase (we think to just above 4.5% by the end of the year from 4.2% at the moment), which will put average consumer incomes under pressure.

Implications for investors

Delinquency rates are likely to rise a little further in the short-term as more consumers move off fixed rates and the unemployment rate rises. And the consumers that are of most concern are those that have loans with a high loan-to-value ratio. But, the probability of large-scale housing loan defaults, forced home sales and large falls in property prices looks low. The RBA estimate that around half of all borrowers have enough buffers to service their debts and essential expenses for at least six months. However, this does not mean that the consumer outlook will improve. The main negative impact from high household debt and fast transmission of monetary policy to consumers is via the consumer spending channel. We expect that consumer spending will remain subdued, which will keep GDP growth low and likely means that negative per capita GDP growth continues.

More information:

State of the nation – the AMP Financial Wellness Report 2024

Every couple of years AMP go out and take a pulse check of Australians’ finances. 

They ask how people are feeling about money matters. Budgeting, spending, investing, saving, managing debt, borrowing, planning for retirement. The works. 

The AMP Financial Wellness Report 2024 is in…and it’s a mixed bag. 

For more insights, check out the full report, linked in this summary.

This article was republished with permission from AMP. Read the original article here.

The government is reviewing negative gearing and capital gains tax, but this won’t be enough to fix our housing shortage

By Michelle Cull Associate professor, Western Sydney University

Associate Professor Michelle Cull has taught undergraduate and postgraduate accounting and financial planning programs for over twenty years at Western Sydney University. In 2021, Michelle received the Western Sydney Women Educator of The Year Award.

Michelle has published in areas of accounting, financial literacy, financial planning, education, ethics and trust. Michelle supervises numerous PhD students and is co-editor of the Financial Planning Research Journal.

Negative gearing and capital gains tax are back on the national agenda as Australians deal with a housing crisis and politicians look for ways to tackle the issue and win voters’ support at the upcoming election.

The Labor government confirmed this week the tax concessions were being reviewed. Meanwhile, the government is struggling to pass its Help to Buy housing assistance legislation through the Senate.

The Help to Buy legislation is aimed at helping first home buyers on low and middle incomes purchase their first home. The government would contribute up to 40% of the home purchase price and require only a 2% deposit from buyers. Buyers could eventually buy back the government’s equity share.

But the legislation has stalled with the Greens wanting more including rent caps and pulling back negative gearing while the Coalition says the government “shouldn’t be in the business of co-owning people’s homes”.

The review, revealed on Wednesday, could reportedly include a cap on the number of properties a person could negatively gear. The changes would not affect anyone who is currently negatively geared.

Negative gearing lets taxpayers claim deductions on their tax for the expenses relating to owning an investment property. They can save on tax as the property potentially rises in value. They can also be eligible for a reduced capital gains tax when they sell the property.

But any changes to negative gearing and capital gains tax policies could face further opposition – depending on how they are implemented. The crucial issue is whether the changes free up enough housing stock and make it more affordable for buyers and renters.

Home ownership in Australia

Based on National Housing Supply and Affordability Council data, home ownership across most age groups has been declining since the 1970s.

Younger households, aged between 25 and 34 years, are hardest hit, having 34% of household income spent on mortgage costs in 2022–23.

About 67% of households in Australia are home owners, and the remainder renters. While the proportion of owners with a mortgage has increased since 1994, so too has the proportion of private renters.

Size of the investment market

Just under 10% of all taxpayers negatively geared their properties in 2020–21 and more than 70% of property investors have only one investment property.

While there have been calls for changes to negative gearing policy to cap the number of investment properties at six, this would impact about only 20,000 individual property investors.

Changes to capital gains tax

Suggestions to increase capital gains tax (CGT) need to be considered carefully, given that

• there is no solid evidence to show that increasing CGT will increase housing supply and in fact, it may have the opposite effect by limiting rental housing available

• any change to CGT legislation also impacts other investments (such as shares), as the CGT discount also applies to other capital gains

• multiple investment properties are often held within self-managed superannuation funds (SMSFs) which are subject to different CGT rules and also benefit from superannuation tax concessions

• the rapid increase in housing prices over recent years is likely to result in very large amounts of CGT being paid on investment properties, even with the current 50% CGT discount.

Other ways to improve affordability and availability

Policy discussions around housing affordability and availability invariably lead to suggestions to change how negative gearing and capital gains tax operate. However, taxation policy is not the only solution available.

Another suggestion put forward is to allow first home buyers to use their superannuation for deposits.

Regardless of one’s position on accessing superannuation for something other than retirement, this suggestion is not viable for low to middle income earners. These households are unlikely to have substantial superannuation balances. Also, they don’t have the earning capacity to service a mortgage for the outstanding amount.

There is currently a push to use self-managed super funds SMSFs to enable home ownership. This would effectively allow individuals to become tenants in homes owned by their super funds.

The government needs to consider ways to make gifting of property between generations easier. Mark Baker/AAP

However, the complexities of superannuation law mean this could cause big problems for people whose relationships break down.

Considering the generational wealth that currently exists in property, the government could consider making it easier for parents or grandparents to gift (or sell) property to their children or grandchildren, in certain circumstances.

This area has not yet been sufficiently explored.

What needs to change

The real issue of housing affordability is multifaceted, and any change needs to be done as part of a broader policy.

It is likely that on its own, changes to negative gearing and/or capital gains tax will not achieve the intended outcome to make housing more accessible and affordable for Australians who want to buy a home.

While the debate around the best way to achieve housing affordability and accessibility continues, and while there are statistics that tell us about the current housing crisis, one crucial thing that is missing is the voice of the very people that any new housing policy should be designed to assist.

More consultation is needed with younger age groups and low to middle income earners who are struggling with high rent and unable to purchase their own home.

Australia desperately needs bold new innovative housing policies that do not rely solely on the taxation system but that consider a raft of measures that meet the housing needs of everyday Australians.

• If you are interested in this topic, you may like to read Michelle Grattan’s opinion - View from the Hill: Albanese and Chalmers play cat-and-mouse on negative gearing with the public – and possibly with each other

This article is republished from The Conversation under a Creative Commons license. Read the original article.

It's time to stop the underquoting ploys

By John Keating

John Keating was Chairman of the REIV Ethics Committee from 200-2008 and has 50 year experience as an auctioneer in the Macedon Ranges.

The auction system for selling real estate in Victoria has functioned very well for many years. However, during the past 25 years the insidious and illegal ploys used by some agents to underquote to purchasers have brought the trustworthiness of estate agents and the auction system into disrepute. Twenty-five years ago "underquote" was not even in the lexicon.

Underquoting, also known as "bait advertising", has become a systemic and entrenched auction practice, which Consumer Affairs Victoria and the Real Estate Institute of Victoria have been impotent to control under current laws and professional codes of practice.

The major problem is an auction sale authority can be signed with a reserve price "to be advised" and there is nothing to stop vendors working in cahoots with their agent from increasing their reserve prices at any time.

Auctions have always been a balance between integrity and street theatre. But the balance has been disrupted and infiltrated by deceitful practices, with thousands of prospective home buyers duped at auctions every weekend in Melbourne. Rogue agents use subterfuge and creative vocabulary to smoke-screen the prices they know their vendors really want.

Many agents are spooked by the idea of increased transparency. They think it will destroy auctions. Many of these are the same agents who 20 years ago were resistant to change and were adamant that banning dummy bids would destroy the auction system. It didn't.

If we can make the auction process totally transparent, many more buyers will be encouraged to attend and buy at auctions, which can only be a positive outcome for vendors. The best way to instantly fix quoting problems would be for the government to legislate that vendors and their agents must publish either a reserve price or an estimated selling price range whereby the lower figure must be the reserve.

If reserve prices were required to be published purchasers would not waste their time at inspections or their money on building and pest reports etc, if the reserve was out of their price range.

Vendors' price expectations would be self-regulated because they wouldn't want to waste their money on expensive marketing campaigns if their own reserves were unrealistic. They would also quickly learn that a published realistic reserve auction with the transparency of the price point where the property will be "on the market'' is a buyer-inquiry magnet.

If vendors did not like such an auction model, they would still have the option to sell by private sale and thereby price their property as high as they like.

The role of agents should be to use their skills and reputations in marketing, product knowledge and customer service to attract the maximum number of qualified prospective purchasers to auctions, to compete in a fair and transparent process to achieve the best result for their vendor clients.

The best auction system is one that has maximum public trust and transparency where prices are set by the market -that is, by purchasers, without artificial price manipulation by agents, auctioneers or vendors.

A core marketing principle is to give purchasers what they want, and what they want most of all is accurate pricing and transparency, not rubbery price guides or no advertised information.

Publishing reserve prices is a simple reform that would be widely welcomed by nearly everybody from first home buyers to the Reserve Bank and will enable the marketplace to be more accurately informed on sale prices and the status of real estate markets.

Most agents who oppose publishing reserves have never conducted an auction with a published reserve price. I have conducted about 150 since 2003, and they do work. To succeed in an environment with published reserve prices, many agents will need to develop new skill sets. This includes agents needing to understand the meaning of misleading and deceptive conduct and learning how to speak the truth to prospective purchasers and vendors.

Buying a home is complicated and stressful. It is one of the biggest financial and emotional decisions in most people's lives and purchasers should not also have to deal with trickery. It's time to stop the underquoting ploys.

This article has been republished with permission from the author, John Keating.

Cities on the front line

Photo by Ben Carless on Unsplash

As Australia faces more intense extreme weather events, cities and urban infrastructure become increasingly vulnerable. Laure Poncet from the Australian Research Council Centre of Excellence for Climate Extremes looks at what happened across the country in 2023, and what we need to design for in the future.

Laure Poncet is a Communications Officer at the ARC Centre of Excellence for Climate Extremes. With a background in climate science and journalism, Laure coordinates communication activities at the Centre, which includes promoting new research to the media and other key audiences. She is particularly interested in translating complex scientific research into accessible language and raising awareness about climate extremes.

Destructive cyclones, extreme heat, back-to-back fires and floods… Australia was hit by a cascade of particularly intense events in 2023. Halfway through 2024, we’ve already seen cyclones, successive heatwaves and severe thunderstorms. Will this year echo the last?

This is hard to predict, but as climate change makes our world hotter, Australia will likely face more intense extreme events impacting all aspects of society. Cities and urban infrastructure are on the front line of the risks associated with these extremes.

In Australia, more than 90 percent of the population lives in cities. To protect the lives and livelihoods of our residents, we must do two things urgently: reduce greenhouse gas emissions and adapt our cities to be more resilient to climate extremes.

Australia has a variable climate

Australia’s climate is highly variable from one year to the next. These changes are primarily driven by natural climate variability, including events such as El Niño and La Niña in the Pacific Ocean, and the Indian Ocean Dipole (IOD). These natural phenomena can lead to changes in rainfall, temperature and weather patterns that can cause droughts, heatwaves, fires, intense rainfall and floods.

For instance, during an El Niño year, we typically expect drier and warmer weather in spring and early summer, particularly in southern and eastern Australia. This dry, warm weather can exacerbate drought conditions and increase fire risk. In contrast, La Niña typically brings above-average rainfall to much of Australia in winter and spring. Through its positive and negative phases, the IOD has similar impacts to El Niño and La Niña. A strong positive IOD was a significant cause of the devastating Black Summer bushfires of 2019–20.

Climate change makes extreme events worse

Our world keeps getting hotter as we continue to emit heat-trapping greenhouse gases. In Australia, temperatures have increased by about 1.5 degrees Celsius since 1910. Superimposing climate change on top of our natural climate variability alters its effects, worsening some extreme events.

For example, climate change causes shifts in weather patterns that can result in more persistent conditions, such as prolonged heatwaves or droughts. Additionally, as the temperature increases, the atmosphere can hold more moisture, fuelling heavy rainfall events, tropical cyclones and severe thunderstorms.

If we look at long-term trends, the role of climate change in extreme events is clear. Since 1950, heatwaves have become more frequent and intense across much of the country, extreme fire weather has increased, and fire seasons have become longer. In some regions, short-duration extreme rainfall events have also intensified. For example, in Sydney, these events have increased by 40 percent over the past two decades.

2023: a year of extremes

In 2023, Australia was hit by a broad range of extreme events, with economy-wide impacts (Figure 1).1 Against the backdrop of the warmest year on record globally, temperatures in Australia were almost 1 degree Celsius above the long-term average. Winter was the warmest on record, while September was the driest since at least 1900.

The year started with above-average rainfall across the country, influenced by three consecutive La Niña events. In January, Cyclone Ellie brought heavy rain to the country’s northern parts, resulting in a rare 1-in-100-year flooding event of the Fitzroy River in the Kimberley region of Western Australia.

Heavy rainfall and flooding impacted transport routes in the Northern Territory and north-western Queensland from late February to early March, leading to widespread food shortages. Increasingly dry conditions developed in late autumn and winter, with New South Wales experiencing its warmest winter on record and its second-worst snow season.

El Niño and a positive IOD, declared in September, brought exceptionally dry conditions and gave rise to an unusually early fire season in Queensland and Victoria. In late October, Queensland’s Western Downs region experienced more than 1,000 bushfires, during which 300 people were evacuated. In the same month, Gippsland in Victoria experienced back-to-back fires and floods. This phenomenon, where two extreme events occur simultaneously, is called a compound event and can be particularly destructive.

The year ended with Queensland being badly hit by an intense thunderstorm over the Lockyer Valley in the south-east of the state, while Cyclone Jasper caused widespread damage to roads, buildings and crops in the north, leaving more than 43,000 homes and businesses without power.

What lies ahead?

Although it’s too early to attribute all these events to climate change (this usually requires several years of research), they indicate what we can expect. In the coming decades, Australia will get hotter. Heatwaves are expected to become more frequent and intense, and to occur earlier in the season. We will likely experience more hot and dry winters, increasing the risk of early-season fires. The trends in tropical cyclones are less certain. Although there will potentially be fewer cyclones, the intensity of cyclones could increase.

While it’s crucial to consider how the number and intensity of extreme events will change, we also need to understand how successive events will compound to cause more significant damage. For example, compound events where extreme wind combines with heavy rainfall are expected to become more common. Heatwaves combined with droughts could also happen more often.

Cities on the front line

Around the world, many cities are already experiencing the impacts of climate change, and these are likely to worsen in the future. The high concentration of buildings and roads, and the lack of trees, make our cities particularly good at absorbing and retaining heat – a phenomenon known as the urban heat island effect. In the future, more frequent and intense heatwaves could exacerbate this effect, putting the wellbeing of residents at risk. Additionally, intense rainfall events could cause flooding and damage infrastructure, while extreme drought conditions could lead to water shortages. Fewer but more intense tropical cyclones are likely to damage buildings, cause widespread power outages and disrupt transportation networks.

To protect the health and safety of urban populations, cities need to adapt to climate change and become resilient to the impacts of extreme events. Strategies such as increasing vegetation and adopting urban design principles that prioritise shade and ventilation can help mitigate the impact of heatwaves and reduce the urban heat island effect. We need to invest in resilient infrastructure that can withstand high winds, heavy rainfall and storm surges, as well as develop a clear understanding of where the risks are, where to build, and where not to.

To manage human-induced climate change, we must drastically cut greenhouse gas emissions. At the same time as dramatically cutting emissions, and as we continue to experience new extremes, we need to reimagine our cities to enable residents to live with these extremes and plan for future climate events.

Footnotes:

(1) Australian Research Council Centre of Excellence for Climate Extremes, The State of Weather and Climate Extremes 2023, climateextremes.org.au/the-state-of-weather-and-climate-extremes-2023; doi.org/10.26190/92kr-0w80.

This article was republished with permission from the author Laure Poncent.

Emotional Architecture: How Curves and Lines Influence Human Experience

By Ema Bakalova

Ema is a trained architect, writer and photographer who works as a Junior Architect at REX in NYC. Inspired by her global experiences, she shares captivating insights into the world’s most extraordinary cities and buildings and provides travel tips on her blog, The Travel Album.

Dive into the psychological effects of curves and lines in architecture and explore how they shape human emotions and interactions with spaces.

When you enter a building, you often immediately sense how it will make you feel. Whether a space feels comfortable and open or claustrophobic and closed off, cold and rigid or organic and fluid, the shapes of spaces — their curves, angles and configurations — play a significant role in their psychological impact and how we perceive them.

Architecture is not just about creating functional spaces; it is about crafting environments that resonate with human emotions and enhance well-being. The shapes and forms used in architecture, particularly curves and lines, play a crucial role in influencing how we feel and behave within a space. By examining studies on shape-induced emotions, exploring examples of therapeutic architecture, and understanding the role of design in user experience, we can appreciate how architecture impacts our emotional and psychological state.

Karen Blixens Plads, Copenhagen, Denmark - Af Jasparbang - Eget arbejde, CC BY-SA 4.0

The human brain responds instinctively to different shapes and forms, which can evoke various emotional and psychological reactions. Understanding these responses allows architects to design spaces that promote positive experiences and well-being.

Curves and Organic Shapes: Comfort and Connection

The City of sciences Valencia valencian community building. Source: pixabay.com

Curved shapes are often associated with comfort, safety, and naturalness. In fact, curves can reduce stress and promote relaxation by actually easing our brains’ threat response. Curves in architecture can mimic organic forms found in nature, like hills, rivers and plants, evoking feelings of calm. Others might perceive curves as facilitating a sense of flow and movement, gently guiding people through a space.

Research in environmental psychology has shown that people tend to prefer spaces with curved elements over those dominated by straight lines. A study by Oshin Vartanian, a professor of perception, cognition and cognitive neuroscience, and colleagues found that participants rated rooms with curved features as more beautiful and pleasant than those with angular designs. The study indicates that when people viewed spaces with curves, the area of the brain associated with emotions and reward was activated, suggesting a sense of safety and positive emotional responses.

I would also categorize spiral shapes alongside curves and circles, as they share the same gentle, flowing qualities. Like other curved forms, spirals are often found in nature and have a unique psychological impact compared to geometric shapes. In architecture, spiral shapes can create a sense of dynamism and fluidity within a space, evoking feelings of movement and transformation. They can symbolize the ongoing cycle of life and evolution, suggesting growth and progress. This is often achieved by incorporating spiral staircases, ramps or curvilinear forms that guide people through a space in an organic, flowing manner. These elements can enhance the experience of a building by encouraging exploration and interaction, reflecting the natural rhythms and patterns found in the world around us.

Lines: Clarity and Structure

James Kampeis - New York building

Straight lines and angles, on the other hand, convey a sense of clarity, order, and structure. They can evoke feelings of stability and strength, which is why they are often used in institutional and commercial architecture. However, excessive use of straight lines can also lead to perceptions of rigidity and coldness. Moshe Bar, an Israeli neuroscientist, conducted studies showing that angular designs activate the brain’s threat perception center. This response may have evolutionary roots, as our brains might perceive sharp angles as potential threats.

While straight lines are associated with efficiency and functionality, they can also create environments that feel impersonal or harsh. In architecture, many people I know tend to gravitate towards designing with straight lines and right angles because they find these forms to be “cleaner” and “easier” to work with. If you move away from using right angles and straight lines, you often find yourself exploring more parametric designs, which are not only more challenging to model and work with, but also more complex to understand and solve from an architectural standpoint.

Somewhere Between

BBVA Head Office Madrid

The integration of curves and lines in architecture goes beyond aesthetics; it shapes how people interact with and experience space. Thoughtful design can enhance user experience by considering the emotional impact of architectural forms. I find this topic fascinating because it applies not only to architecture but also to a wide range of design fields and professional strategies. In my opinion, although research indicates that straight lines and sharp edges in architecture might be associated with increased feelings of stress or perceived threat, this isn’t universally true for all architectural experiences. The impact of shapes on our emotions is nuanced and influenced by a multitude of factors that interact to shape our perception of a space. Some nuances to consider could be:

1. Context and Functionality

In many architectural contexts, straight lines and sharp edges convey clarity, order, and strength. These features can create environments that feel professional, organized, and efficient. For instance, corporate offices and institutional buildings often utilize straight lines to emphasize functionality and reliability. In these settings, the perception of sharpness or rigidity can be mitigated by the intended purpose of the space, which might prioritize focus and productivity over comfort.

2. Balance with Other Design Elements

The overall emotional impact of a space is often the result of a careful balance between various design elements. While sharp edges might initially suggest a sense of harshness, they can be softened by incorporating other features such as:

Lighting: Warm, natural lighting can soften the appearance of hard lines, making a space feel more welcoming.

Materials: The use of natural materials, such as wood or stone, can counteract the severity of straight lines, adding warmth and texture to the environment. Integrating water features or soft landscaping into the design can also help soften sharper edges and create a more gentle appearance.

Color: Color palettes can significantly alter the perception of a space. Soft, neutral colors can create a calming effect, while vibrant colors might energize the space.

Furniture and Decor: The inclusion of curved furniture and decor elements can provide contrast and balance to spaces dominated by straight lines, introducing a sense of flow and comfort.

3. Personal Preferences and Experiences

Individual preferences and personal experiences also play a critical role in how a space is perceived. What might feel cold and uninviting to one person could feel clean and modern to another. Personal associations and cultural backgrounds can shape our emotional responses to architectural elements.

4. Architectural Intent

The architect’s intent and vision for a space are paramount. Sometimes, a sense of tension or drama is deliberately introduced to evoke specific emotions or thoughts. In these cases, sharp lines and edges can be used to create a sense of awe or emphasize a building’s purpose, such as in museums or art galleries where the architecture itself is part of the artistic narrative.

Understanding the complex interplay of design elements that influence our emotional experience of a space allows architects to create environments that resonate with their intended purpose and audience, offering a nuanced balance between form, function, and human experience. Successful architectural designs balance these elements to create spaces that are both beautiful and efficient. Each form can be used to its advantage, enhancing the overall experience for occupants.

This article was originally published on The Architizer. Read it here.

Oliver's insights Will house prices crash? And what’s needed to fix housing affordability

By Shane Oliver, Head of Investment Strategy and Chief Economist, AMP

Key points

- Predictions of an Australian house price crash create lots of interest but have been a dime a dozen over the last 20 yrs.

- However, there is more to the surge in property prices than easy money with a supply shortfall being the main factor. Absent much higher interest rates and or unemployment, a house price crash in Australia looks unlikely.

- The key to sustainably improving housing affordability is to boost supply, better align immigration to housing supply, reduce or delay public infrastructure spending, encourage decentralisation and tax reform.

- A failure to boost affordability risks a further slide in home ownership and rising inequality.

Introduction

Apart from “what will home prices do?" and "where are the best places to buy a property?" the main debate around the Australian housing market has been about poor housing affordability, occasionally interspersed with a scare that home prices will crash. The most recent example of the latter was on 60 Minutes last week with a call by US demographer & economist Harry S Dent that Australian house prices could fall “as much as 50% in the coming years”. But how serious should we take forecasts for a crash? And more fundamentally how do we fix affordability?

Basic facts on the Australian property market

The basic facts regarding the Australian housing market are well known:
First, after strong gains in home prices over many years, it’s expensive relative to income, rents & its long-term trend and by global standards.
Second, flowing from this, housing affordability is poor:

• The ratio of average dwelling prices to average wages (red line in the next chart) & household income (green line) has doubled since 2000.

• The time taken to save for a deposit has roughly doubled over the last 30 years from five years to more than 10 years.

• The portion of income needed to service a mortgage has hit an all-time high, thanks to the combination of the high price to income ratio and the sharp rise in mortgage rates starting in 2022.

Third, the surge in prices has seen our household debt to income ratio rise to the high end of OECD countries, which exposes Australia to financial instability on the back of high rates and or unemployment.
These things arguably make calls for some sort of crash seem plausible.

Crash calls for Australian property are nothing new

US commentator Harry S Dent’s forecast for an up to 50% fall in property prices is nothing new. Calls for an Australian property crash – say a 30% or more fall - have been trotted out regularly over the last two decades.

• In 2004, The Economist magazine described Australia as “America’s ugly sister” thanks in part to a “borrowing binge” and soaring property prices. At the time, the OECD estimated Australian housing was 51.8% overvalued.

• Property crash calls were wheeled out repeatedly after the GFC with one commentator losing a high-profile bet that prices could fall up to 40% & having to walk to the summit of Mount Kosciuszko as a result.

• In 2010, a US newspaper, The Philadelphia Trumpet, warned: “Pay close attention Australia. Los Angelification (referring to a 40% slump in LA home prices) is coming to a city near you.” At the same time, a US fund manager was labelling Australian housing as a “time bomb”.

• Similar calls were made in 2016 by a hedge fund: “The Australian property market is on the verge of blowing up on a spectacular scale…The feed-through effects will be immense… the economy will go into recession".

• Over the years, these crash calls have periodically made it on to Four Corners and 60 Minutes. The latter aired a program called “Bricks and slaughter” in 2018 with some predicting falls of as much as 40%.

• And Harry S Dent was regularly predicting Australian property price crashes last decade that didn’t occur.

Why a crash is unlikely?

Of course, a crash can’t be ruled out, but as I have learned over the last two decades the Australia property market is a lot more complicated than many “perma property bears” allow for.

First, the property market is not just a speculative bubble fuelled by easy money and low interest rates. Sure low rates allowed us to pay each other more for homes but the key factor keeping them elevated relative to incomes has been that the supply of new dwellings has not kept up with demand due to strong population growth since the mid-2000s and more recently with record population growth resulting in an accumulated shortfall of around 200,000 dwellings at least but possibly as high as 300,000 if the reduction in average household size that occurred through the pandemic is allowed for. This partly explains why property prices have not collapsed despite the threefold rise in mortgage rates since May 2022.

Second, the property market is highly diverse as evident now with strength in previously underperforming cities like Perth, Adelaide and Brisbane but weak conditions in Melbourne, Hobart and Darwin.

Thirdly, Australian households with a mortgage have proven far more resilient than many including myself would have expected in the face of the rate hikes in 2022 and 2023. This is evident in still relatively low mortgage arrears (of around 1% of total loans). This may reflect a combination of savings buffers built up through the pandemic including in mortgage pre-payments and offset accounts, access to support from the “bank of mum and dad”, the still strong jobs market allowing people to work extra hours & an ability to cut discretionary spending (suggesting definitions of what constitutes mortgage stress may be overstating things). Of course, arrears are starting to rise as these supports recede, so the continuation of this resilience should not be taken for granted.

Finally, the conditions for a crash are not in place. This would probably require a sharp further rise in interest rates and/or much higher unemployment. Sharply higher interest rates from the RBA are unlikely as global inflationary pressure is easing and global central banks are now cutting. Our inflation & rates went up with a lag versus other countries & are likely to follow on the way down. Higher unemployment – with jobs leading indicators pointing to less jobs growth – is the biggest risk though.

So, a property price crash is a risk, but would likely require a deep recession. Our base case for average home prices remains for modest growth ahead of a pick-up after rates start to fall.

What can be done to boost housing affordability?

Of course, a house price crash would improve housing affordability – but it’s also a case of “be careful of what you wish for” because a crash would likely also come with a deep recession and sharply higher unemployment which could see many lose their homes along with a hit to incomes. However, improving housing affordability is critical as its long-term deterioration is driving excessive debt levels and increased mortgage stress and contributing to a fall in home ownership (the blue line in the first chart). Of course, other factors have also driven falling home ownership since the 1960s including people starting work and family later in life, a decline in perceptions that owning a home is necessary for security & growth in other forms of saving beyond housing. But worsening affordability is likely a big contributor and falling home ownership due to this is something we should be concerned about as its contributing to increasing inequality and if it persists it could threaten social cohesion.

So, beyond crashing home prices, what can be done to boost housing affordability? My shopping list includes the following:

• Build more homes - relaxing land use rules, releasing land faster and speeding up approval processes, encourage build to rent affordable housing and greater public involvement in provision of social housing. The commitment by Australian governments to build 1.2 million homes – backed up by incentives and strong moves by at last NSW and Victoria over five years starting from this financial year is a welcome and big move down the path to boost supply. So far though approvals and commencements running at around 160,000 to 170,000 homes annually are well below the implied 240,000 target.

• Refocus on building more units – we will need more units (which are lower cost) than houses in the mix. The only time we consistently built more than 200,000 homes per annum was in the unit building boom of the 2015-19 period. Back then unit approvals were around 50% of total approvals whereas they are now about one third.

• Slow down infrastructure spending – home builders are now regularly complaining about the difficulty in building apartments. Apart from issues around approvals, much of this relates to cost blow outs and labour shortages and beyond the disruption caused by the pandemic an ongoing driver is the competition for resources from booming public sector infrastructure projects.

• Match the level of immigration to the ability of the property market to supply housing - we have clearly failed to do this since the mid-2000s and particularly following the reopening from the pandemic, and this is evident in the ongoing supply shortfalls. Of course, we need to be careful to not over-react with the crackdown on student visas and numbers risking a lasting negative impact on our education sector which is our biggest export earner after iron ore and energy.

• Encouraging greater decentralisation to regional Australia – this should be helped along with appropriate infrastructure and of course measures to boost regional housing supply.

• Tax reform - including replacing stamp duty with land tax (to make it easier for empty nesters to downsize) and reducing the capital gains tax discount (to remove a distortion in favour of speculation).

Policies that won’t work, but are regularly put forward by populist politicians as solutions to poor affordability, include: grants & concessions for first home buyers (as they just add to higher prices); abolishing negative gearing (which would just inject another distortion into the tax system and would adversely affect supply), although there is a case to cap excessive use of negative gearing tax benefits; banning foreign purchases altogether (as they are a small part of total demand and may make it even harder to get new unit construction off the ground); and a large scale return to public housing (as a major constraint to more units is excessive costs and delays, and just switching to public housing won’t fix this).

This article originally appeared on AMP Insights. Read it here.

What makes a city great for running and how can we promote ‘runnability’ in urban design?

By Jua Cilliers Head of School of Built Environment, Professor of Urban Planning, University of Technology Sydney

If you’ve ever run a big marathon in your city, you’ll know the feeling can be electric. Blocked off streets, cars temporarily banished from the road and a sense of enormous freedom as you run.

For most runners, however, running through cities on an ordinary day is not always pleasant. Planners often focus on walkability and bicycle-friendly cities, which is great to promote active transport. But we don’t generally plan cities to be good for runners.

Yet, millions of us are runners; it’s one of the world’s most practiced sports and more of us are joining run clubs.

Making our cities “runnable” could inspire even more people to take up running. So, what makes a city runnable?

Urban design and ‘runnability’

It was at conference of the International Society of City Planners in Jakarta in 2019 that a group of us – all planners who love running – began to seriously consider city planning with a focus on runnability. We even held a “run-shop” (instead of a workshop) where we ran together to explore the city.

For the past five years our group has been reflecting the runnability of cities. We realised factors such as safety, air quality, accessibility, and infrastructure play a significant role.

Our recent paper published in the Journal of Urban Design and Planning explored the key urban design elements that make a city runnable.

Among other things, runnable cities prioritise:

• accessibility

• uninterrupted movement for runners (avoiding stops, crossroads and railways)

• safety

• aesthetic appeal and

• well-maintained green infrastructure, such as parks, urban forests, and trees (which also improve air quality and reduce urban heat).

So, how can planners build these elements into urban design?

Urban design principles that promote runnability

Several urban design principles can enhance the runnability of a city:

Connectivity and accessibility: This means developing a network of interconnected running paths and trails that are easily accessed from various parts of the city (especially neighbourhoods). Even better if can be green corridors that connect to other parks and open spaces, and support continuous movement.

Safety and security: Ensuring running paths are well-lit and separated from vehicle traffic is crucial. Traffic calming measures such as vehicle lane narrowing, wider footpaths, and appropriate landscaping enhance runner safety. Street trees also help reduce car speeds, as they alter our perception of how wide the road is and provide a psychological cue that we’re in a residential area. Redesigning urban infrastructure to include dedicated running paths alongside walking paths and bicycle lanes, is a great idea.

Inclusive design: City design should encourage active mobility, which means including benches, water fountains, and restrooms along running routes. It means building footpaths that enables running, and avoiding uneven, slippery or unfavourable surfaces such as cobblestones. It also means making it easy to find your way around – even in unfamiliar environments.

What makes a city unpleasant for running?

Narrow pavements, sharp corners, noise (including traffic noise) and areas with many traffic lights are some of the big concerns for city runners.

Other factors that make a city less “runnable” include:

• high pollution levels

• inadequate infrastructure, such as potholes and broken or non-existent paths

• poor lighting

• unsafe traffic environments

• unleashed dogs

• encounters with cars and cyclists

• urban heat (which is exacerbated by too much concrete and not enough greenery).

Around 75% of athletes on the exercise app Strava indicated extreme heat affected their exercise plans in 2023. Given the pace at which the climate is changing, factoring urban heat into city design will grow ever more crucial.

We don’t want our cities to become so hot that going for a run feels impossible.

Does it matter what trees are planted alongside the paths?

Street trees offer benefits to pedestrians and runners.

However, they also bring challenges. Tree roots can buckle sidewalks, fallen leaves or fruits can make paths slippery, and trees can sometimes block the view of nearby traffic.

The type of trees planted along running paths are therefore crucial. Native trees are often the best choice, as they are well adapted to the local climate and require less maintenance. They provide shade, improve air quality, and support local biodiversity.

Trees with high canopies and low root invasiveness offer shade without obstructing the paths or damaging the pavement.

Where are the great runnable cities of the world?

Several cities around the world have been recognised for their runnability. For instance, Copenhagen has an extensive network of running paths and green spaces, along with a strong emphasis on safety and inclusivity.

Cities such as Portland, Vancouver and Amsterdam have also made significant strides in promoting runnability.

And according to the app, Runkeeper, Sydney is a top contender due to its harbour, gardens, coastal paths and parks. Auckland in New Zealand also made the list, celebrated for its harbours, great paths, and runs you can take “just outside the city for trails through seemingly enchanted forests”.

The challenge for urban planners and governments is to extend this urban running experience to cities, and neighbourhoods, all over the world. If we want to create healthier and more inclusive environments, runnable cities might be the answer.

This article was originally published on The Conversation. Read it here.

Solar above, batteries below: here’s how warehouses and shopping centres could produce 25% of Australia’s power

By Bruce Mountain, Professor and Director, Victoria Energy Policy Centre, Victoria University

Imagine if Australian cities became major producers of clean energy, rather than relying on far-flung solar and wind farms.

Far fetched? Hardly. Our cities and towns are full of warehouses, commercial areas, shopping centres and factories. These types of buildings have one very important underutilised resource – large expanses of unoccupied rooftops, perfect for solar and battery power stations.

If our commercial and industrial areas took up solar and storage, it would be revolutionary. Electricity could be produced in cities and used in cities, reducing transmission losses. Commercial businesses could generate solar power during the day, store it in batteries on site and sell it back to the grid during the evening peak.

Our calculations show Australia has enough unused commercial and industrial rooftop space to supply at least 25% of our annual electricity use – five times as much as currently supplied by gas-fired generators.

Australia is already the world’s top rooftop solar nation, per capita. But our solar is largely on our houses. We have four times as much residential solar as we do on commercial buildings. In Europe, it’s the opposite – there’s 1.5 times as much solar on businesses as on houses. The EU’s new Solar Energy Standard is expected to double rooftop solar capacity in four years.

In our new discussion paper, we make the case for a massive expansion of battery-backed solar photovoltaic power on Australian business premises. Call it “business power”.

There are excellent reasons for policymakers and building owners to look at this. It offers a potentially large new source of cheap, reliable, clean electricity with little downside risk.

What’s the benefit of warehouse power stations?

Rooftop solar has been Australia’s quiet achiever. In 2023, rooftop solar produced 70% more electricity on Australia’s rooftops than either hydro generators or solar farms.

Solar farms are largely built in rural areas, as it’s easier to get large tracts of land. But city-based solar has advantages. City solar doesn’t change land use, need vegetation cleared or change the beauty of the countryside. Solar and wind farms in rural areas have to send power to cities, necessitating expensive new transmission lines. Some planned new lines have proven controversial.

When you add storage, you turn cheaply produced solar into a much more valuable commodity – reliable evening power. In evenings, the sun has set and demand soars. This is when much more expensive coal, gas or hydro generation dominates supply.

Locally produced battery-backed solar can also make better use of our distribution networks – the urban poles and wires. In a recent report, the peak body for Australia’s energy networks found surplus capacity in our distribution networks could be used by decentralised power generation and storage.

By contrast, some large rural transmission lines are already hitting capacity limits as distant wind and solar farms take up spare capacity.

What would it take to start this in earnest?

When a business owner or householder goes solar, it’s usually to save money. By producing their own power, they reduce how much expensive grid power they buy.

By contrast, our proposal would encourage businesses to install solar and batteries so they can export power to the grid.

A scheme like this would need policy support to get it started. That’s because it’s much less profitable to sell to the grid than it is to avoid buying from the grid. In electricity, as in other markets, wholesale prices are almost always lower than retailer prices.

To make it attractive to businesses, we propose the incentive of new floor prices (minimum prices) for electricity sold to the grid by businesses. It would cover electricity injected into the grid outside solar peak periods – before 11am or after 2pm – and from behind-the-meter batteries discharging to the grid during the evening peak, from 6pm to 9pm.

Floor prices would have to be set carefully to make investment worthwhile – but without unnecessary public largesse. To be eligible, businesses would have to have enough storage relative to the solar installation to be able to reliably store solar power to sell in the evenings. The payback period would differ from one business to another.

"Cemetery Curve, former Milwaukee Electric interurban" by Aaron Volkening is licensed under CC BY 2.0.

What’s in it for the public?

Like almost all competing energy policies, this scheme would require governments to use public funds to stimulate supply. Why might consumers or taxpayers support this?

Our governments are already using the money of taxpayers and electricity consumers to fund new gas power stations, to prolong the life of ageing coal power stations and to encourage more large renewables and storage. We believe this scheme would stack up favourably on cost, speed, cleanliness, reliability and ease.

The scheme also offers a comparatively cheap way to cut greenhouse gas emissions. The value Australia’s government places on avoiding one tonne of carbon dioxide equivalent in 2024 is A$70. We estimate our scheme could cut emissions at a cost of around $23 a tonne.

What’s next?

Let’s say governments introduce these floor prices. What would happen next?

We anticipate business owners would weigh up the benefits. Many would decide to take advantage of the policy directly, while others might rent their rooftops to specialist companies to do the same.

Recent regulatory changes mean businesses are now legally able to export power without messing with their existing retail contracts.

Of course, policies come with risks. Desk-based studies like ours can only go so far. Important information is often only revealed by putting policies into practice. But schemes like this one could easily be tweaked or closed to new entrants – just as state governments did in ending premium solar feed-in tariffs.

In short, there seems to be little to be lost and a potentially large benefit to society.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Five fixes are called for to clean up the CFMEU

By Innes Willox, Chief Executive, Australian Industry Group 5 August, 2024

Innes Willox is Chief Executive of the Australian Industry Group, a leading industry organisation representing businesses in a broad range of sectors including manufacturing, construction, transport, defence, ICT and labour hire. Innes was appointed Chief Executive in May 2012.

Australia has a once in a generation opportunity to rid our biggest construction union of ingrained criminal and corrupt conduct. We cannot afford to miss it.

Placing the construction division of the CFMEU into administration can only benefit our economy, construction companies and the construction workforce who deserve a reputable and strong union to represent them.

The question is what next?

The pending appointment of an administrator to clean up the CFMEU is an unavoidable response to a sad saga of failed regulation of workplace relations in the building and construction industry.

Clearly, the CFMEU could never have been credibly left to fixing its own mess.

Putting the union into administration is a sensible first step to cleaning it up.

Deregistration is always an option to keep in the back pocket, but the deregistration of the Builders Labourers Federation in 1986 simply gave birth to the CFMEU as many of its officials and delegates simply changed their job titles.

Government directed action through the administration process needs to involve far more than just weeding out CFMEU connections to organised crime. Removing criminality does not warrant accolades.

Stories of a pattern of widespread bullying, thuggery, intimidation and misuse of power by the CFMEU in Australian workplaces are not new. Some of it may fall short of criminality but it has been tolerated for far too long. The culture of fear that has evolved has simply made it impossible for industry participants to speak out.

The average Australian would be revolted and disgusted if they knew the full extent of the systemic abuse and stand-over tactics that construction employers report to be routinely deployed by CFMEU representatives.

Court judgment after court judgment has piled up against a union where paying fines and ignoring judicial admonishments appeared to be part of the business model. Workers have been bullied into joining the CFMEU. Employer representatives are routinely intimidated and harassed. Taxpayer-funded construction projects have faced monstrous delays and cost overruns.

The union has acted like it alone controls projects and worksites. Safety has commonly been weaponised as an industrial tool to stand over employers and contractors.

Five fixes are needed.

An administrator of the union needs to be able to clean out its leadership that has tolerated and even encouraged criminal infiltration. A union is not a charity aiming to provide hardened criminals with “second chances” to be its representatives or delegates.

Just as the corporate sector and its regulators can have zero tolerance for criminal behaviour, the union movement must be in the same boat. The CFMEU’s construction division needs a clean slate and to start again.

Secondly, the Federal Government needs to drop its ideological objection to the construction sector having its own regulator. The abolition of the Australian Building and Construction Commission was always madness and has enabled and emboldened the increasingly appalling behaviour on our construction sites.

To say, as some ministers have, that the ABCC was only about policing “stickers on hard hats” is a farcical and deliberate misrepresentation of its role. Tens of millions of dollars of fines after court actions for countless safety breaches, unlawful disruptions and acts of horrific intimidation demonstrate that a new and separate construction sector regulator is a priority.

Thirdly, the new union right of entry laws need to be withdrawn. They will simply let the acolytes of John Setka run amok across the economy, using spurious claims about safety to force their way into worksites to intimidate small business owners, hold up production and foster discontent.

In construction, it is almost inevitable that even with the CFMEU in administration, other strongly aligned unions on site will use the powers to cause maximum disruption in retaliation for their demise.

Fourthly, governments need to urgently step in to block the CFMEU’s ongoing efforts to use its redundancy fund Incolink to force out competing funds in the sector. Incolink is simply a back doorway the union has used to levy money from employers and then funnelled millions of dollars into its accounts to fund the payment of fines ordered by the courts. The lack of oversight and regulation is astounding.

Fifthly, governments need to review their procurement rules that have wasted billions of dollars on infrastructure projects and allowed the CFMEU to flourish when it has been offered open chequebooks. The incentive is to drag projects out, not to finish them.

The productivity decline of 2.9 per cent last year in the sector is a massive drag on the economy. Funding a productivity gain in a construction enterprise agreement is virtually non-existent. Cost blow outs in infrastructure are a major driver of our inflation curse.

All of this would be helped if governments dropped their feigned shock at what has happened on construction sites. The “I knew nothing” defence demonstrates either intentional or wilful ignorance of what has occurred on their watch.

This is a line in the sand moment. The time for decisive repair is now. The union needs to be cleaned up to allow it to legally and properly act on behalf of its members. This will likely take years, but it must happen for union members, constructors and our economy to genuinely prosper.

This article has been republished with permission from AI Group. Read the original article on their website here.

Turbulent times ahead for Australian construction industry

Domenic Schiafone is a Director of RLB in Victoria. He has extensive knowledge in all areas of quantity surveying, and financial and cost management.

Having worked with a variety of construction processes and contracting methods, his focus is on cost planning and estimating for high-rise developments and sporting projects.

Joining RLB in 1998 as a cadet quantity surveyor, Domenic became an associate in 2007. Relocating to manage our Dubai office, Domenic was involved in many large scale developments in the Middle East. Returning to Melbourne in 2011, he was appointed to his current role in 2014.

Domenic’s project experience is significant and diverse, covering a broad range of industry sectors in Australia and overseas. He holds a Bachelor of Property and Construction from the University of Melbourne.

According to the Rider Levett Bucknall (RLB) 2nd Quarter 2024 Oceania Report, the Australian construction industry is navigating a turbulent economic landscape in 2024.

Domenic Schiafone, Director of RLB Oceania Research & Development, stated, “The Reserve Bank of Australia (RBA) has predicted subdued economic growth coupled with a constrained labour market. This scenario suggests a continuation of the upward trend in labour costs, a critical component of overall project expenditure.”

“Further intensifying inflationary concerns is the stagnation of productivity growth within the construction sector. Since our Q1 2024 report, four of nine cities reported a rise in forecasted construction escalation for 2024, with the other five remaining steady. Overall, the rate of escalation remains significantly higher than the 4.0% CPI uplift anticipated for the full calendar year,” he added.

“Our research into construction output per worker since 2000 has found that since 2013 there has been a 26.5% increase in the number of workers within the overall construction workforce, who on average are working 2.0% fewer hours per annum and achieving a 25.4% lower output.”

Impact on project delivery

The anticipated rise in construction costs will have a significant impact on project delivery across various sectors, including public infrastructure, private sector development, and residential housing. Increased construction costs will likely lead to delays and budget overruns for public infrastructure projects, impacting essential services such as transportation, utilities, and healthcare. For private developers, the rise in construction costs will make it more challenging to deliver projects within budget, potentially leading to cancellations, delays, or a reduction in the quality of construction materials and methods. The affordability of housing is likely to deteriorate further due to rising construction costs, exacerbating the housing supply shortage and making it even more difficult for Australians to achieve homeownership.

National forces driving cost pressures

Several national key forces are converging to drive up construction costs in Australia. The construction sector in Australia has experienced a concerning decline in productivity in recent years. Overall, Australia’s labour productivity fell by 3.7% in 2022/23, according to the Australian Productivity Commission’s 2024 Productivity Bulletin. In the construction sector, labour productivity fell by 1.8% – well below the long-term average growth rate of 1.3%. This suggests a requirement for more resources, particularly labour and materials, to achieve the same level of output. This decline contributes to higher costs for construction projects. RLB’s analysis of the construction output per worker highlights the current output of the construction workforce, historical changes in the construction workforce, and the impact these changes are having on overall output per worker.

Policy and economic landscape

The potential for further interest rate hikes by the Reserve Bank of Australia (RBA) to combat inflation presents a complex situation for the construction industry. While higher interest rates may dampen demand for construction projects, they also increase financing costs for developers, potentially hindering project viability. Calls for government policy changes are gaining traction, particularly regarding tax reforms aimed at improving housing affordability. These reforms could involve changes to negative gearing and capital gains tax arrangements, which currently incentivise property investment and, according to many industry commentators and analysts, contribute to the housing supply shortage.

Labour market shortfall a critical challenge

A significant challenge lies in the industry-wide dearth of skilled tradespeople. BuildSkills Australia estimates a national shortfall of 90,000 skilled workers, which will be required to meet the Government’s National Housing Accord target of 1.2 million homes over five years, highlighting the severity of the issue. This shortage is particularly acute in Queensland due to the construction demands of the 2032 Olympic Games. The lack of skilled labour directly impacts project budgets as wages rise to attract available workers.

Cost pressure impact on the states

RLB’s Construction Market Update Report noted that the impact of these cost pressures varies across different regions in Australia. Queensland faces a particularly challenging construction cost environment, with a robust pipeline of projects creating high demand for skilled labour, exacerbated by the construction program required for the 2032 Olympic Games in Brisbane. New South Wales is grappling with high land prices, persistent construction cost escalation, and competition for skilled labour from Queensland, threatening project feasibility and potentially leading to a slowdown in new project commencements. Victoria faces the challenge of meeting ambitious housing targets while burdened by developer taxes and limited land availability, impeding the construction of new housing units and keeping construction costs elevated. South Australia is at the forefront of addressing affordability concerns with housing reforms that have shown promise in stimulating residential construction activity, potentially leading to an increase in housing supply and a moderation of construction costs. Despite recent increases in project approvals, Western Australia is experiencing significant cost pressures, highlighting the broader national trend, though increased project approvals offer hope for increased construction activity.

This article was originally published on the RLB website. Read it here.

Econosights: Australian housing supply challenges across the states and territories

By Diana Mousina, Deputy Chief Economist, AMP

Key points

- Housing demand in Australia has been running above housing supply for the past two decades causing a dwelling shortage.

- High population growth in recent years and low levels of dwelling construction has made the housing shortage worse.

- However, there are variations across the states and territories, with some in a housing shortage (Qld and NSW) and some likely in oversupply (Victoria) which is influencing dwelling prices in capital cities, rental vacancy rates and rental growth.

Introduction

Most of the usual analysis on the Australian housing market focusses on the national problem of housing undersupply. However, this disguises the mixed outcomes across the states and territories which influence housing values and rents across capital and regional cities.

Government housing policies

In 2023, the Federal Government signed a “National Housing Accord” which is purely an aspirational target to build 1.2 million new “well-located” homes over 5 years from mid-2024. The states, territories and local governments will receive $3.5bn in payments towards this target as an incentive to build more homes. Australia went through a building boom from 2013 until 2019, with an average of 193K dwellings built per year over this time (see the chart below).

Since 2019, building construction has trended down, from the impact of high interest rates, elevated inflation for construction costs, high wages growth and issues with finding suitable labour (due to border closures and numerous infrastructure projects crowding out labour in residential construction). Over the year to March, approximately 172K dwellings were completed but dwelling starts and building approvals (a good forward guide to actual construction) suggest that over the next 12 months dwelling completions will drop to approximately160K, well short of the government’s 240K target.

Despite the governments goals to build more dwellings, 95% of residential construction is done by the private sector in Australia. The states and territory governments and local councils have responsibility around the development and supply of new land. They control the release of land and the growth of greenfield areas, how the land is used, how it is developed as well as ensuring that these areas have essential services. Support for social and affordable housing comes from both the state and federal governments. And the Federal government can also provide incentives for the states to build, as they have done with the National Housing Accord.

Housing demand and supply

Housing demand is determined by population growth (mostly driven by net overseas migration) and changes to household size. In Australia, the average number of people per household has declined from 2.9 persons in 1983 to a little below 2.5 persons in 2022. The number of people per household rose in the initial phase of the pandemic and then started declining in 2021 as individuals opted for more living space.

Housing supply is determined by completions of homes, after taking into account demolitions, conversions and vacant properties. Prior to 2000, housing demand and supply were fairly balanced in Australia. After this time, housing demand started running above supply, with persistent undersupply ramping up from 2005 (see the chart below).

Our estimate is that housing demand is currently running around 240K and will slow to 185K over the next few years as population growth subsides. Housing supply is expected to be ~167K in 2024 and average around 180K in the out-years which means that the housing supply shortage will continue. On our estimates, the total accumulated number of dwelling undersupply is around 200K dwellings nationally which is around 78K households (based on the assumption that there are 2.5 persons per dwelling). However, there are differences in supply and demand across the states and territories

Housing demand versus supply across the states

We have derived an estimate for housing demand versus supply on a state basis, with a similar process to the national data. Our findings show that the largest accumulated housing undersupply since 2000 is in Queensland and New South Wales, followed by Tasmania, the Northern Territory, Western Australia and South Australia. But Victoria looks to be seeing a large oversupply of dwellings along with some oversupply in the ACT. The chart below looks at the accumulated over and undersupply of dwellings across the states and territories.

Qld’s housing undersupply started accumulating during the mining boom from 2005 (until the peak in the mining boom in in 2012) when population growth was high. Low construction in recent years has made the undersupply problem worse. Qld has experienced high interstate migration since 2018 (see the chart below) due to affordability challenges in neighbouring NSW, with the pandemic further increasing interstate migration into Qld. Victorian housing completions have run at high levels relative to other states in recent years and the outflow of interstate migration during the pandemic (see the chart below) deepened the oversupply.

Housing undersupply is supporting dwelling prices in Sydney, Brisbane and Adelaide. Perth home prices have also accelerated lately which reflects some housing undersupply but is likely more due to better affordability in WA (also evident in a recent increase in interstate migration). Melbourne home prices are underperforming the rest of Australia, reflecting oversupply and tax policy changes which have dampened investor confidence.

The supply of housing also affects the rental market. Nationally, the rental market is tight with low vacancy rates, particularly in Adelaide and Perth currently (see the chart below). Brisbane, Sydney and Melbourne vacancy rates are off their lows, but are still in the ultra-low single digits and below the long-run average level which is keeping rents elevated.

Rental growth has been strong across Australia, up by nearly 8% over the year to March, with the strongest growth seen in Perth, Sydney, Brisbane and Melbourne (see the chart below). Rental growth has turned down in Darwin, Canberra and Hobart.

State budgets

The state and territory budgets didn’t have any major concrete policies to target dwelling supply, besides more aspirational plans to build additional homes (for example Victoria had the most ambitious targets to build 80K homes per year for the next decade). A lot of the focus both in the state and federal budget was on increasing social and affordable housing, supporting crisis and transitional accommodation repairing public homes, greater funding allocation for homelessness services and helping build the capacity of Aboriginal and Torres Strait Islander community controlled housing organisations. Most states have first home buyer grants available for new dwellings along with stamp duty concessions. QLD has the most generous first home buyer policy now, doubling the grant in this year’s budget for some time.

Implications for investors

Fundamentally, Australia is not building enough homes to keep up with demand which is putting upward pressure on home prices and rents. States that have the highest level of undersupply like Qld and NSW need to lift construction levels significantly. However, based on current levels of building approvals, issues with labour shortages and high material costs we think that construction levels will remain below underlying demand and keep upward pressure on home prices for some time yet.

This article was originally published on the AMP website. Read it here.

How to ensure higher-density housing developments still have enough space for residents’ recreation needs

By Anthony Veal Adjunct Professor, Business School, University of Technology Sydney and Awais Piracha Associate Professor of Urban Planning, Director Academic Programs, Geography Tourism and Urban Planning, Western Sydney University

Growing populations and housing shortages are affecting cities worldwide, including in Australia. It’s driving them to adopt high-density development near public transport hubs instead of endless suburban sprawl on city fringes.

In Sydney, the state government has plans for transport-oriented developments within 400 metres of 37 existing train stations. These will include 170,000 new dwellings.

In Melbourne, work has begun on a massive project, the Suburban Rail Loop. In the first of four stages (SRL East), 70,000 dwellings will be built around six new stations.

These developments pose unique challenges for urban planners. In particular, residents of these higher-density precincts will still need public open space and recreation facilities.

Communities and local councils are concerned higher residential densities will increase pressures on infrastructure, services and open space. Local residents often oppose such developments. They fear these new, denser communities may lack vital infrastructure and services, shifting the burden of meeting these needs onto neighbouring areas.

Open spaces are crucial for physical activity and an attractive and healthy urban environment. However, traditional methods of planning open space are designed for lower-density suburbs. They struggle to meet residents’ recreational needs in high-density areas.

We’ve developed a new planning tool to help ensure higher-density developments provide enough recreational space.

High density challenges traditional planning

We reviewed open space and recreation planning methods around the world and assessed their suitability for meeting recreational needs in high-density areas.

The most common “standards” method specifies a certain area of open space, such as hectares per 1,000 population. Our review found it has been criticised for its “one size fits all” approach and lack of supporting research evidence. The approach may work in low-density suburbs but not in high-density areas that simply don’t have enough open space to meet the specified standard.

Another traditional approach is the “demand-based” model. It relies on consultation with an existing population.

But the population of the transport-oriented development is not resident at the time of planning. It’s also likely to differ from the surrounding population – for example, in age structure.

A better approach is needed. Our solution is the Recreational Activity Benchmark (RAB) model.

This model focuses on the new population’s likely level of recreation participation. This benchmark is based on anticipated characteristics of the new residents, such as age structure, and associated recreation patterns. Existing survey data from across the metropolitan area indicate the patterns we can expect.

A mix of strategies is needed

To meet this benchmark level of recreation demand in the limited space available requires a mix of strategies.

The first strategy is to rely more on indoor facilities such as sports halls, gyms and swimming pools. These allow for high levels of physical activity using much less land than traditional playing fields. They can be open for longer hours, are unaffected by weather and can be built as part of high-density, multi-purpose developments.

The second strategy is repurposing non-traditional open spaces for recreation. In particular, designing streets, footpaths and pavements as pleasant green areas encourages walking and cycling. Maintaining these areas for such activities thus also provides for recreation.

As part of this strategy, rooftops, school yards and other unconventional areas can be transformed into active recreation zones. Cities around the world have used innovative design solutions.

Singapore’s Dual-Use Scheme opens school yards to the public after hours. Seoul has creatively transformed a former highway overpass into an attractive walkway and public space.

A highway overpass was turned into the Seoul Skygarden running through the congested heart of the city. Sagase48/Shutterstock

Other solutions include green streets, vertical gardens, multi-functional street furniture and water features.

Specific examples include Tokyo’s “green roads” and Seoul’s street workout stations. The Singapore Sports Hub employs a dedicated team to offer diverse activities, making the best use of limited space.

These solutions all help meet physical recreation needs in high-density developments. The limited amount of open space can then be reserved for informal recreation, such as walking and quiet contemplation.

In Japan, green roads integrate greenery along the road with surrounding green spaces. photoK-jp/Shutterstock

Making sure recreation needs will be met

Higher-density development around transport hubs aims to overcome housing shortages and avoid the harmful impacts of urban sprawl. Our planning tool can help overcome community concerns about these developments lacking spaces for recreation.

This tool establishes a benchmark recreational activity level derived from participation rates per person across the metropolitan area. It calculates the land needed to support recreation and reallocates participation to activities that require less land or can be done indoors. In this way, it ensures high-density areas can still meet residents’ recreational needs.

The RAB model enables planners to produce a range of possible scenarios. Different mixes of facilities and activities can be flexibly developed to suit different local environments and different anticipated resident populations.

This article was originally published on The Conversation. Read it here.

Grattan on Friday: it’s good to put administrators into the CFMEU – but how do you prevent future crops of bad apples?

By Michelle Grattan Professorial Fellow, University of Canberra

John Setka leading a CFMEU rally in Sydney in 2023.CREDIT:MICHAEL QUELCH

Former leading Canberra press gallery journalist, Laurie Oakes, now retired, had a cut-through question about the government’s response this week to the CFMEU crisis.

“Bill Shorten tough and effective on CFMEU,” Oakes posted on social media after Shorten’s appearance on the ABC’s 7.30. “Why wasn’t it Albo taking the lead?”

The prime minister could point out he was in Queensland, campaigning, and unveiling candidates for the election. Regardless, Oakes’ question was spot on.

The PM wouldn’t have missed the sharp comparison with Shorten, the former Labor leader, who is always closely watched by the Albanese camp.

Albanese has answered questions about the CFMEU scandal all week. But despite the magnitude of the issue, he has left the public front-running to Workplace Relations Minister Tony Burke.

The government needed to cauterise the imbroglio as fast as possible. Hence the huge flurry of activity, centred on having the Fair Work Commission get underway the appointment of administrators into the construction division in eastern Australia.

On Thursday the ALP’s national executive suspended the affiliation of the construction division to the NSW, Victorian, South Australian and Tasmanian branches of the Labor Party. This means the party won’t levy any affiliation fees or accept donations. Delegates won’t be able to attend ALP conferences.

(The construction division is almost all that is left of the union. The miners have left and the manufacturing division is on the way out. The only other division is the Maritime Union of Australia and no action has been taken against it.)

The desire to put the CFMEU issue behind it may have driven the government’s choice to have the Fair Work Commission apply to appoint the administrators, rather than doing so itself.

“What I’m wanting to do is make sure this is a process under the regulator and not a political process,” Burke said at his Wednesday news conference.

Burke has promised the government will play an active supportive role to the Fair Work Commission, even legislating if that becomes necessary. Still, it’s hard to avoid the conclusion the government’s aim is to keep the follow-through at a distance, especially in the run-up to the election. That’s likely to mean fewer media questions.

When he was workplace relations minister in the Gillard government, Shorten took a different course with the Health Services Union.

The HSU was even more scandal-ridden than the construction division of the CFMEU. In dealing with it, the government acted directly, itself applying to put in an administrator.

Shorten has a special interest in the CFMEU. The Australian Workers’ Union, which he formerly headed, has had years of conflict and competition with the CFMEU. Shorten retains his interest in industrial relations more broadly. Nevertheless it was notable to see him turn up in the high-profile 7.30 interview on the day of Burke’s announcement (albeit with approval from the PM’s Office).

Former leaders are always in a somewhat ambiguous position, given the levels of paranoia that characterise political parties. Shorten mostly stays within his ministerial guardrails, but inside those he determines his own tactics.

At the moment, as Minister for the National Disability Insurance Scheme, he is pulling out all stops to try to get his legislation to reform the scheme through parliament. Recently this included holding a news conference with Pauline Hanson.

Shorten won’t have another chance at leadership, but he has a legacy to protect and advance. The NDIS grew out of his idea. It’s important to the government generally that the reforms are put on track before the election. It’s actually also in the Liberals’ long-term interests – it would be harder for a future Coalition government to rein in this scheme, which has run out of control.

Returning to the CFMEU, the week-long revelations have meant Labor has again found its post-July 1 “good news” on the cost of living totally overshadowed by domestic stories that are negative for it (never mind the drama in the United States). The first distraction, as the tax cuts were landing, was the resignation of Labor senator Fatima Payman from the party and speculation about whether a “Muslim vote” could harm Labor in western Sydney. Then came the union stories.

Labor will hope its quick response on the CFMEU issue will mean that in voterland it washes over fairly quickly.

Many people, one would expect, will be highly cynical about the reaction of political and union leaders who declare the revelations about criminality have come as “a shock”. While the extent and details may have surprised and appalled, the atrocious conduct of the construction union has been common knowledge.

The public would likely think the politicians protest too much. People’s general scepticism about their representatives was again highlighted by this week’s Essential poll that found three quarters of Australians think politicians enter into politics to serve their own interests.

It will take years to know whether industrial conduct in the construction industry can really be reformed. The deregistration of the Builders Labourers Federation in the 1980s failed to do the job.

The CFMEU’s Queensland/Northern Territory secretary, Michael Ravbar, a one-time member of the ALP national executive, flagged in a defiant statement that change will be fought by some. “Albanese has panicked and soiled himself over some unproven allegations in the media,” he said. “These gutless Labor politicians talk tough about affiliation fees and donations because that’s the only language they understand – money. The CFMEU is an industrial union, not a political outfit. Our strength has always come from our members on the shop floor, not from ladder-climbing politicians in the halls of power.”

After the ACTU suspended the construction division on Wednesday, ACTU staff were told to work from home as “a health and safety” measure. The CFMEU generates a level of fear in all sorts of places.

No doubt the administrators will clean out the union. But you’d be an optimist to feel confident that one collection of bad applies won’t eventually be replaced by another. Finding a way to stop the tree being blighted by yet more rotten fruit may be beyond any administrator. At the very least, it will require more rigorous regular spraying and pruning than we’ve seen in the past.

This article was originally published on The Conversation. Read it here.

Looking back at the Olympic venues since 1896 – are they still in use?

By Vaughan Cruickshank, Senior Lecturer in Health and Physical Education, University of Tasmania and Tom Hartley, Lecturer in Health and Physical Education Education, University of Tasmania

Olympic Games are big affairs that require massive infrastructure projects to build the various stadiums and venues.

Many of the sports have specific requirements – fake whitewater and rocks for kayaking, huge slopes for ski jumps, or sand for beach volleyball. On top of that, these venues need to be able to support large crowds and the technology needed to manage the events.

As former Victorian premier Dan Andrews discovered in 2023, hosting big sporting events costs big money.

The Tokyo Olympics are estimated to have cost A$23 billion dollars, a lot of which was spent building infrastructure.

A 2022 report from the International Olympic Committee revealed that 85% of the stadiums, venues and structures used in the Olympics are currently still in use.

But how are they used, were they new structures and what happened to the 15% of venues that have fallen into disuse?

Stadiums

Panathenaic Stadium in 1896 - Athens, Greece. Built and modified since circa 330 BC, it was used in the first modern Olympics in 1896. Via Wikimedia Commons

Panathenaic Stadium in 2021 - Athens, Greece. Currently used for various purposes. George E. Koronaios, via Wikimedia

The all-marble Panathenaic Stadium hosted the first modern Olympics in Athens, Greece in 1896. It was used again during the 2004 Olympics (archery and the marathon finish) and is now a popular tourist attraction that has hosted events such as concerts and fashion shows in recent years.

Francis Olympic Field in St Louis in the United States was used as the main venue for the 1904 Summer Olympics. It is the oldest Olympic stadium still in regular use for official sporting events.

It has been renovated several times and is currently used by Washington University’s track and field, cross country, football, and soccer teams.

Many Olympic stadiums continue to be used for local, national and international sports such as athletics and soccer, as well as large concerts and performances.

For example, the 1960 Summer Olympic Stadium in Rome, Italy is the home ground of the national rugby union team and soccer clubs Roma and Lazio. It has also hosted matches in the 1990 FIFA Soccer World Cup, UEFA Soccer Champions League, World Athletics Championships and more.

Fisht Stadium in Sochi, Russia hosted the 2014 Winter Olympics and Paralympics. It also hosted games in the 2018 Soccer World Cup (including Australia vs Peru) and is now the home stadium for soccer team PFC Sochi.

Cities that have hosted multiple Olympics have refurbished and reused venues.

For example Tokyo reused 1964 venues such as the Tokyo Metropolitan Gymnasium and Nippon Budokan Hall in 2021; the Los Angeles Memorial Coliseum and Rose Bowl were both Summer Olympic sites in 1932 and 1984 and will be used again in 2028.

Venues

The National Aquatics Centre, known as the 'Water Cube', under construction in 2007 – Beijing, China. Used in the 2008 Summer Olympics. Angus, via Wikimedia Commons

The National Aquatics Centre, known as the 'Water Cube', 2015 – Beijing, China. Used in the 2008 Summer Olympics.

Olympic venues continue to be used for sporting and non-sporting activities.

Many existing venues such as skiing slopes and summer venues such as Banyoles Lake (rowing - 1992 Barcelona Summer Olympics) and Wimbledon (tennis – 1908 and 2012 London Summer Olympics) hosted their sport before the Olympics and have continued to host it after the Olympics.

Other venues have been reused in a variety of ways.

For example, the stadium and skating and ice hockey venues used in the 1928 and 1948 Winter Olympics in St Moritz, Italy are now part of a private residence.

The 1980 Winter Olympic village in Lake Placid, US, is now a federal prison.

The Water Cube (swimming, diving, water polo – 2008 Beijing Summer Olympics) is now a popular water park.

Unused Venues

Alonzo Herndon Stadium, 2014 - Atlanta, Georgia. Used in the 1996 Summer Olympics. Peter Ciro

Copacabana Stadium, 2016 – Rio de Janeiro, Brazil. Used in the 2016 Summer Olympics. Currently dismantled. Gabriel Heusi via Wikimedia Commons

Some Olympic venues such as the Mt Eniwa downhill events site (alpine skiing – 1972 Sapporo Winter Olympics) and Copacabana beach volleyball arena (beach volleyball – 2016 Rio Summer Olympics) were temporary venues that were dismantled after the games as planned.

Many other older venues have been renovated and redeveloped.

Other venues have unfortunately fallen into disrepair for various reasons.

The Trebevic Olympic Bobsleigh and Luge Track (bobsleigh, luge – 1984 Sarajevo Winter Olympics) was damaged during the Bosnian War (1992-1995) and has not been repaired. It is now overgrown and covered with graffiti.

Alonzo Herndon Stadium (hockey – 1996 Atlanta Summer Olympics) is in a similar graffiti-covered state of disrepair.

Most of the Helliniko Olympic Complex (softball, canoe/kayak, hockey, baseball, basketball – 2004 Athens Summer Olympics) is closed or has been demolished due to poor planning and political, economic and administrative upheaval.

Australia

Melbourne Cricket Ground, 1956 – Melbourne, Australia. Used in the 1956 Summer Olympics. Radford, Anthony J., State Library of Victoria

Heidelberg Olympic Village, 1956 – Melbourne, Australia. Used in the 1956 Summer Olympics. Rose Stereograph Co, State Library of Victoria

So how have Australia’s Olympic venues fared? In short, pretty well.

Most Melbourne 1956 Summer Olympic venues such as the Melbourne Cricket Ground (athletics, soccer, hockey, opening and closing ceremonies) and Exhibition Building (basketball, weightlifting, wrestling, modern pentathlon) are still used regularly.

Only the Melbourne Olympic Park Velodrome (cycling, currently a medical centre) and the Merritt Rifle Range (shooting, currently a housing estate) are not in use.

Venues built specifically for the Sydney 2000 Summer Olympics such as the Sydney International Aquatic Centre (swimming, diving, water polo) and Penrith Whitewater Stadium (canoeing, kayaking) continue to be some of the premier locations for their sports in Australia. The Olympic Village is now part of the suburb on Newington.

Some temporary venues such as the Bondi beach volleyball arena were dismantled after the games as planned. The Sydney Entertainment Centre (volleyball) is the only non-temporary venue no longer in use. It was demolished in 2016 as part of the redevelopment of Darling Harbour.

As we head towards the Brisbane Olympics in 2032, careful planning will be needed to ensure that planned infrastructure is cost effective and can be used by local residents, and others, for many years after the games have finished.

This article was originally published on The Conversation. Read it here.