The ‘long boom’ – Sydney 1850s versus Now

The ‘long boom’ – Sydney 1850s versus Now

The discovery of gold near Bathurst launched Sydney into its first ‘golden age’. Thousands of hopeful diggers came through Sydney, and it was also through Sydney that the bullion flowed out. Many failed to make their fortune on the goldfields and drifted back to the city, and this population stimulus deepened and widened economic activities. Sydney’s population grew… from just under 40,000 in 1851 to about 150,000 in 1871.

I have always loved that saying “History doesn’t repeat itself, but it does rhyme”. With this in mind, it is interesting to reflect that Australia has recently experienced a “once in a generation” resources boom. With the boom now ended, the question is “where to from here?”.

The “fly-in fly out” mining workers have had to adjust to the new reality. The property booms that were seen in regional mining towns, have evaporated, and everyone from the government (think Joe Hockey) to the man-in-the-street have had to re-align their thinking.

So when Australia’s foremost property developer, Stockland, says Sydney is entering a “golden decade of housing growth”, it is worth reflecting on the past, and the present.

If you take a look at the NSW economy, you will see that a wall of “infrastructure activity” is about to start rolling in. In excess of $85 billion is to be spent in Sydney over the next 5 years, with the “big daddy” being Sydney’s second airport at Badgery’s creek.

Mike Baird has been quoted as saying that NSW will be the “infrastructure capital of the world”, over the next 3 to 5 years.

It is hard to not see this coming infrastructure spend, as a major economic positive. While the initial construction phase of Badgery’s creek is only expected to create 10,000 jobs, this is expected to ramp-up (significantly) as other associated road and infrastructure projects get underway.

More locally we have the so called “South East” light rail project, which will similarly create significant new jobs both in the construction phase, and over the longer-term.

All of which helps explain Stockland’s positive outlook. While the “naysayers” drone on that the Sydney housing market is crazy. I see things differently. I see Sydney in the midst of another “Long Boom”. There is a huge shortage of “housing”, and it is only recently that developers have started “ramping up” construction, to cater for another population influx.

This is not to say that at some stage the long boom will be punctuated by tougher times. After all cycles, both short and long-term are guaranteed. Indeed it is interesting to note that the Sydney boom that started in the 1850s, was all but gone by the 1890s, as the economy hit a rough patch.

Sydney was economically weak during the resource boom, at least in relative terms. Unlike the 1850s, Sydney was not the “gateway” to the boom. However with the boom over, Sydney is rising.

Indeed there is a disconnect, in that Sydney’s housing market is booming, while other cities are languishing. The net migration from NSW to Queensland is at record lows, and Sydney is the nation’s economic “hot spot”. So with a host of positive drivers including low interest rates, big infrastructure projects, rebounding tourism, overseas investors, it is hard to disagree with Stockland.

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