‘Business As Usual’

COVID-19 (Coronavirus) –
An update from The Herniman Group

To our clients and industry partners,

The Herniman Group is closely monitoring the spread of COVID-19 (Coronavirus) across Australia using information and updates provided by the Australian Government Department of Health and The World Health Organisation.

We are committed to playing our part in helping to minimize health risks to our staff, clients, industry partners and the wider community and although it’s ‘business as usual’ we have implemented some measures and adapted how we operate in response to COVID-19.

These measures include but are not limited to the following:
• Minimising face to face meetings – these will be replaced by teleconference or video conference
• No external visitors to our office unless it is project critical and by appointment
• Increased awareness and practising of social distancing
• No handshakes
• Heightened focus on good hygiene practices
• Adherence to client / site specific policy changes implemented as a result of COVID-19.

The Herniman Group will continue to be focused on supporting our clients and industry partners and will work with you all to achieve successful outcomes during this challenging time. If there is anything you would like us to do to meet your organisation’s response to the COVID-19 crisis, please reach out to us.

Our team will keep in regular contact with you all regarding existing and upcoming projects by telephone and email and we encourage you to do likewise.

Keep safe and healthy.

John Herniman

environmental-sustainability

People become amazingly confused when they hear the dreaded words: ESD

What does it really mean? Environmentally Sustainable Development.

This is nothing to do with climate change although, in my opinion, actioning most of these points contributes significantly to reduce the impact of climate change.

Some large strides have been made since the dreaded days of the 1970s:

  • New projects require ESD statements and calculations and these pro formers are becoming tighter
  • Harvesting of rainwater reducing public pipes and development pipes
  • Significantly heavier insulation
  • Double glazing
  • Thorough consideration of orientation
  • Better connection of private indoor and outdoor spaces

On the other hand other things have slid backwards:

  • Recycling seems to be totally disorganised

 

Where to from here?

  • Plant more trees and foliage
  • Use more public transport
  • Use electric vehicles
  • Produce vegetables and fruit from our private gardens
  • Generate more electricity in our homes, townhouses and apartments

 

Buildings

  • More insulation
  • Sealing gaps
  • Using electricity generated by recyclables such as solar, wind, and hydro
  • Geothermal heating and cooling
  • Eliminating airborne pollutants from various chemicals
  • Harvesting more rainwater
  • Treating sewerage more locally
melbournecbd

Town Planning Changes

 

 

WARNING: this is dry!

 

Way back in mid-2018 the Victorian State government made a number of planning changes called Amendment VC148.

It seems as though their main thrust is to simplify, and reduce the number of applications through common sense. Also being able to fast track small projects is easier.

What does this mean in review in a practical sense?

  • Reduce car parking requirements for new uses of many existing buildings in commercial areas
  • No visitor parking within 400 m of public transport (PPTN)
  • No permit to reduce the required number of car parking spaces for a new use in an existing building, providing certain requirements are met
  • Reduced car parking within 400 m of PPTN resulting in significantly fewer car parking numbers
  • Integration of VICSmart (fast tracking) into relevant zones
  • Heritage overlays more transparent and easier to discover
  • Applications for land adjacent to a Road Zone are now exempt from notices and reviews.

 

For us this means fewer car parks on site which could even improve yield! Also more fast tracking of smaller projects.

elevation

What is going to happen with dwellings in 2020?

The current situation
“Borrowing costs were not going to rise anytime soon” source HSBC chief economist says in mid-2019 and the Reserve Bank governor repeatedly saying that interest rates are going to stay lower for a considerable period of time.

Meanwhile dwelling values in Sydney and Melbourne finished the year up with 6.2% in Sydney and 6.1% and Melbourne in the final three months of 2019. HSBC forecasts dwelling prices to rise nationally by five – 9% in 2020 Sydney eight – 12% and Melbourne 10 – 14%. Commercial assets could rise even faster.

The ANZ/Property Council quarterly survey showed that industry professionals expect the rate, or yield, of prime assets to contract by a further 2.7% point over the next 12 months. “We see rates of 4% are unprecedented and, in some respects unsustainable. We are going to see a lot of global capital flow into our market pursuing core assets this year” said non-bank lender MaxCap.

The value of lending for owner-occupied dwellings increased by 2.0% over November nationally and was 12.6% higher than recorded over November 2018. Although investor lending increased the monthly total remained 3.2% lower than recorded over November 2018. “However, investor lending remains 20.3% lower on the same year to date comparisons”, says Metropole’s Michael Yardney.

ABS shows a drop of 10.8% for dwelling approvals in the year up to November 2019.

Forecast
This means that the pent-up demand for dwellings increased significantly during 2019.

What does this mean for dwelling approvals and for the requirement for more housing in Australia?

We believe that this means that the current backlog of dwelling numbers will only be improved by several years of significant dwelling construction increase. This means more townhouses and apartments in the capital cities and single dwellings on city fringes and country areas.

What does this mean for house prices?
This will mean a significant increase of house prices in the short term which will be borne by the individual owner occupier. The credit squeeze imposed by the reserve bank over the past few years has had its effect, and decreased demand, especially for investors. But it has had its toll. Owner occupiers will purchase existing dwellings and probably pay more than it’s worth.

Those same people may choose to build on greenfield sites, which will be a boon for land developers and for housing builders. The developer of apartments and townhouses in built-up suburban areas is still finding it hard to obtain money. Eventually, this will ease and there will be a boom of townhouse and apartment construction in the next few years.

What are the risks of this having a crash?

elevation

What is going to happen with dwellings in 2020?

The current situation
“Borrowing costs were not going to rise anytime soon” source HSBC chief economist says in mid-2019 and the Reserve Bank governor repeatedly saying that interest rates are going to stay lower for a considerable period of time.

Meanwhile dwelling values in Sydney and Melbourne finished the year up with 6.2% in Sydney and 6.1% and Melbourne in the final three months of 2019. HSBC forecasts dwelling prices to rise nationally by five – 9% in 2020 Sydney eight – 12% and Melbourne 10 – 14%. Commercial assets could rise even faster.

The ANZ/Property Council quarterly survey showed that industry professionals expect the rate, or yield, of prime assets to contract by a further 2.7% point over the next 12 months. “We see rates of 4% are unprecedented and, in some respects unsustainable. We are going to see a lot of global capital flow into our market pursuing core assets this year” said non-bank lender MaxCap.

The value of lending for owner-occupied dwellings increased by 2.0% over November nationally and was 12.6% higher than recorded over November 2018. Although investor lending increased the monthly total remained 3.2% lower than recorded over November 2018. “However, investor lending remains 20.3% lower on the same year to date comparisons”, says Metropole’s Michael Yardney.

ABS shows a drop of 10.8% for dwelling approvals in the year up to November 2019.

Forecast
This means that the pent-up demand for dwellings increased significantly during 2019.

What does this mean for dwelling approvals and for the requirement for more housing in Australia?

We believe that this means that the current backlog of dwelling numbers will only be improved by several years of significant dwelling construction increase. This means more townhouses and apartments in the capital cities and single dwellings on city fringes and country areas.

What does this mean for house prices?
This will mean a significant increase of house prices in the short term which will be borne by the individual owner occupier. The credit squeeze imposed by the reserve bank over the past few years has had its effect, and decreased demand, especially for investors. But it has had its toll. Owner occupiers will purchase existing dwellings and probably pay more than it’s worth.

Those same people may choose to build on greenfield sites, which will be a boon for land developers and for housing builders. The developer of apartments and townhouses in built-up suburban areas is still finding it hard to obtain money. Eventually, this will ease and there will be a boom of townhouse and apartment construction in the next few years.

What are the risks of this having a crash?