Soaring property prices and a growing population are pushing cities to expand, creating an opportunity for accountants to provide metropolitan-scale services in their traditional heartland – suburbia.
Bernard Salt could not have predicted that drawing ties between the smashed avocado brunches of Millennials and their flailing attempts to crack the residential property market in Sydney would cop such heat and analysis.
The demographer says the line was intended to “poke fun at Baby Boomers” by using the setting of a hipster café to demonstrate the conservatism of middle-aged thinking.
“I presented this column as self-deprecating, a parody of middle-aged moralisers,” Mr Salt said in a recent Accountants Daily podcast. “I did it through a setting of a Baby Boomer wandering into a hipster café.”
“You can’t read the menu because the writing is too small … You can’t even sit on a milk crate because that means your bottom is lower than your knees and you can’t get back up again. And then you secretly whisper to each other, because you can never say this out loud, ‘Look at all those young people eating smashed avocado. Shouldn’t they be saving for a house’?”
The column was published over a weekend in October 2016. But by 10am the following Monday, Mr Salt was fielding calls from the BBC in London, he says.
“This thing went global, viral and feral absolutely immediately.”
While Mr Salt’s words may have struck a chord at the time, there has been an even larger impact: it has fuelled the ongoing national debate about housing affordability, lifestyle choices and property ownership.
Because of an increasing population and a competing workforce, property prices in Sydney and Melbourne are not expected to drop dramatically, if at all, Mr Salt says. But, state governments are upping their infrastructure spends to record highs, and firms like KPMG are confident this will translate into the long-term creation of other major cities and the opening of new markets.
Those accountants who are looking for longevity and a way to grow their client bases will be well positioned to take advantage of the expanding cities, says David Pring, KPMG managing partner for Western Sydney.
“We’ve got the NSW government spending a lot on infrastructure, and the federal government also,” Mr Pring says.
“I think there’s a great opportunity for accountants.”
For cities like Sydney, Mr Salt can’t foresee the market becoming easier for property buyers, and new ones in particular. Sydney has too much work in its favour — because of its job opportunities, Sydney is now competing on a global scale and attracting the best talent from all over the world.
“I have heard and read a lot about property experts predicting the bubble is going to burst and property values are going to plummet and so forth,” Mr Salt says.
“At the end, Sydney has 5 million people. By 2050, it will have 8 million people. If we keep pumping 80 to 90,000 people per year into Sydney that will simply increase the pool of people who will eventually compete up the value of property.
So, in a city that is fundamentally growing, the value of property will continue to increase.”
Australians will then need to look outside of the city in order to find affordable housing. The issue then, however, is how to secure a professional job. Sydney’s and Melbourne’s central business districts hold some of the highest concentrations of professional jobs in Australia.
But Mr Salt predicts this will soon change.
“Yes, the CBDs of Sydney and Melbourne and counterparts in other capital cities will still be important, but we will see stronger suburban job centres. I don’t think the next generation is going to sit on the train from Penrith for an hour and half to come into the CBD,” he says.
“You can’t have a city of 8 million people with all the jobs just in one place in the centre, like a fried egg. The egg will scramble up.
“I think we’ll see the diffusion of professional-type jobs into quite significant suburban regional centres. That might be Chadstone, Monash or Box Hill in Melbourne and certainly Chatswood, Parramatta and maybe Blacktown (in Sydney).”
Pushing jobs and people outside of the city centres is actually what many city and state governments are envisioning, particularly on the eastern seaboard, says KPMG’s Mr Pring. This is evidenced by new infrastructure projects, including rail lines and a new airport in Badgerys Creek by 2026.
“You’ve got a population growth doubling in size in the next 50 years, and most of that growth is coming west of Parramatta,” he says.
“Western Sydney is expected to add a city of the size of Canberra in the next single digit number of year and then add a city the size of Adelaide, in terms of population numbers, west of Parramatta in the next 20 years. It is significant growth expected. And of course, the CBD of Sydney is not central. It’s actually in the east.”
The projects are outlined in a plan by the Greater Sydney Commission, which proposes creating a city with a CBD in the east, a CBD in Parramatta and a CBD west of Liverpool, Mr Pring says.
“They’re proposing a three-city model and the plan is to have a population that can live, work and play 30 minutes from home,” he says.
Other major Australian cities are also following this same logic, according to Mr Salt.
“It’s illogical to have people living in the suburbs and commute into one place for work. Why not take the work and scatter it around?” he says.
“You would reduce the amount of commuting, reduce the carbon footprint, give time back to people, make your cities more interesting, more engaging. The interesting flow-on from that is that you might see the culture of cities shift. So instead of hipsters living in Bondi and St Kilda, you might find them living in St Mary’s.”
The opportunity for accountants
In the expansion of major cities exists an opportunity for accountants who want to tap into what is so far an under-serviced market compared to metropolitan centres, says KPMG’s Mr Pring.
In the early 2000s, KPMG actually closed its presence in Western Sydney, believing that with the advent of better technology, more clients would want to be served remotely, he says. But over a decade, KPMG’s revenue from Western Sydney clients had declined.
“A lot of the thinking at that time was that with technology, you don’t need to be close to clients. You can do work from anywhere. The way it sort of panned out is while the work can be done anywhere, you actually need to be consistent in Western Sydney,” Mr Pring says.
“KPMG took a view that we needed to be in Parramatta, so that office was established three years ago. Then in the background, the Greater Sydney Commission came out with this three-city model. We looked at that and said if that’s the model that’s being pursued at a macro level, KPMG needs to have a presence in all three cities.
“So, a year ago we opened an office in Penrith as well.”
Since moving out west, Mr Pring has noticed a demand for accounting services from companies looking to embark on growth strategies.
“We’re finding that there’s a great opportunity to help companies here to do things they’ve never done before. The complexity and needs of companies are growing,” he says.
“What we’re finding is that with that presence, there is great demand. We can serve clients in that space much easier than just being located in the CBD. I think there’s a great opportunity for accountants in general who have a focus and ability to be in Western Sydney.
“There is a need to innovate and bring in new technology. That’s a new element that accountants are well placed to be able to deal with.”
Beyond gaining new business, expanding westward has also brought new talent to KPMG.
“We can access a bigger talent pool by providing an opportunity to work, live and play closer to home. We’re able to attract more people because they can have a shorter commute yet still accelerate their careers,” Mr Pring says.
“That’s given us access to a talent pool that we didn’t have before.”
Though some would argue they can serve western clients through a virtual relationship, Mr Pring says he doubts this can really work. KPMG’s prior experience would suggest that while the work can be done remotely, the relationship is not as strong.
“To develop the relationship piece, you need to be able to be close to the market,” he says.
Mr Salt would agree. He says the “hottest topic” in boardrooms is on workplace changes.
“Part of that thinking is will people be working from home? I don’t think so. I think you get the best out of people when they collaborate. It’s the watercooler conversations,” he says.
“It’s not working from home. It’s working near home.”