Podcast: We find a $30k-a-night apartment

Can you imagine paying $30,000 a night for a pad in London? Yes, that’s thirty thousand dollars, in case you thought it was a misprint.

And this is in a city that has its share of homelessness and has had to introduce a 90-night limit on short-term holiday lets to combat the drain on residential properties caused by platforms like Airbnb and their ilk.

Also in Britain, a government survey has revealed how many previously unidentified apartment blocks still have potentially fatal flammable cladding, more than seven years after the Grenfell disaster.

Meanwhile the contrast in Australian political approaches to the housing shortage – lack of supply or excess of demand – was brought into stark relief by the result of the US presidential election.

One side said it was a failure of investment, the other that it was caused by immigrants.

Spoiler alert: In case you haven’t heard, Donald Trump will be back in the White House until J D Vance slips an overdose of moonshine and opiates into his diet Coke then announces he was secretly a liberal all this time.

Seriously though, as we discover, even a socialist republic has trouble building apartments ordinary people can afford (unless you’re Aussie – then they’re a bargain).

This week’s podcast is the last to be recorded on our travels and is a bit shorter than usual, not least because we were cramming the last of our journalistic tasks in between trying to make the most of our dwindling days in France.

Next week we’ll be back to whatever passes for normal in strata.

Transcript in full

Jimmy (0:00 – 0:06)

Here we are in Paris, on the last leg of our great grand European tour.

Sue (0:06 – 0:08)

Yes, it’s been fabulous so far.

Jimmy (0:08 – 0:35)

And finding out that some of the problems that we have in Australia with apartment are replicated elsewhere, and some of them most definitely are not, or some of the things we’ve encountered are certainly not replicated in Australia. Is it possibly going to be a shorter podcast than normal? We’ll see how we go.

I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review, and I edit the flatchat.com.au website.

Sue (0:35 – 0:40)

And I’m Sue Williams, and I write about property for the Sydney Morning Herald, The Age, the AFR, and Domain.

Jimmy (0:40 – 1:21)

And this is the Flat Chat Wrap.

The first thing that strikes me is, there’s just been a report issued in Britain seven and a half years after the Grenfell fire disaster, the one that raised the issue of flammable cladding, and they’ve discovered that there are 1,000 apartment blocks in Britain, roughly, that have flammable cladding, or inflammable cladding, which is the same thing. Combustible cladding, they call it these days.

Sue (1:21 – 1:26)

And they don’t seem to have, they haven’t really come up yet with a strategy to deal with them, have they either?

Jimmy (1:26 – 1:27)

No.

Sue (1:27 – 1:59)

And they’ve had inquiries into the Grenfell fire, and they kind of know what the problems are, but they just haven’t worked out a way of coping with stripping all those buildings. And it’s interesting, because we started much later, probably as a result of all the publicity over Grenfell, looking at our buildings that had flammable cladding, and we seem to be doing okay. The government came up with a strategy, New South Wales and Victoria, of how to strip off that cladding and replace it with cladding that isn’t flammable, safer cladding, and that’s been going ahead quite quickly.

Jimmy (2:00 – 2:17)

Yes. I mean, one of the things with us, Grenfell was the perfect storm. It was a building where they had flammable cladding, people were told to stay in their homes because that was where they’d be safest, and it turned out to be a huge mistake.

They were just trapped in the middle of a huge fire.

Sue (2:17 – 2:26)

An inferno. An inferno, yes. And people tried, as we probably remember, those horrendous pictures of people leaping from the windows of the building, many of them to their death.

Jimmy (2:26 – 2:49)

It was, but we’ve had two cladding fires in Australia, both of them caused by cigarettes on balconies, and I’ve got myself into a bit of trouble over the years by suggesting it would be easier and more effective to ban cigarettes and barbecues from balconies than it would be to replace all the cladding on all the buildings.

Sue (2:50 – 2:53)

Well, certainly in the short term, that sounds like a good idea, really.

Jimmy (2:53 – 2:55)

But that was considered unacceptable.

Sue (2:55 – 2:59)

And un-Australian, saying people can’t have barbecues on their balconies by many people.

Jimmy (3:00 – 3:06)

So yeah, the Brits have got a lot of work to do to fix this, if they’re going to fix it.

Sue (3:07 – 3:17)

Yeah, and we were driving in a taxi just around the corner from Grenfell, weren’t we, and the taxi driver said, boy, it’s still standing there, still looks like a mess, nobody quite knows what to do with it, really.

Jimmy (3:17 – 3:18)

Knock it down would be the answer.

Sue (3:18 – 3:19)

Oh, yeah.

Jimmy (3:19 – 3:21)

But they’ve got a housing shortage in Britain as well.

Sue (3:22 – 3:29)

That’s right. And can it be really rebuilt in a sustainable way, and they still haven’t decided, I think.

Jimmy (3:29 – 3:41)

At the other end of the spectrum, in London, we had the good fortune to stay in a very posh hotel, the Mandarin Oriental, in Hanover Square in London.

Sue (3:41 – 4:27)

Yeah, and maybe lots of us know the brand, really. They started off, I think, in Hong Kong or Bangkok, and they’re an Asian brand, and they now have 42 hotels around the world. And we stayed at the newest one, because I was writing about it, in London, they’ve got a new one in Mayfair.

And it is really interesting, because they’re a hotel, but they also have apartments in the hotel. And they built a number of apartments, and they sold them off the plan when the hotel was built. And they all sold off the plan very, very quickly.

And what they said to the new owners was, would you like us to decorate them in exactly the same style as the hotel rooms and suites? And if you’re willing to do that, then if you want to rent them out, like on short-term letting platforms, like as part of the hotel, we will do that for you. We will run that for you.

Jimmy (4:27 – 4:41)

Well, can I just… I thought it was the other way around. I thought they said to people, would you like us to let out your apartment when you’re not using it?

And then said, OK, but if you want that, you have to use exactly the same finishes as in the rest of the hotel.

Sue (4:41 – 4:56)

Yep. So a number of them now are apartments to rent. And it’s interesting, because I guess a lot of hotels put their hotel rooms on short-term letting platforms as well, on Airbnb and stays and stuff, because it makes sense for them.

Jimmy (4:56 – 4:59)

It makes it easier for people to do a direct comparison.

Sue (5:00 – 5:08)

So in London, this is the first time the Mandarin’s ever done it. So now they have places you can rent, apartments you can rent, I mean, quite expensive.

Jimmy (5:08 – 5:09)

Well, how expensive?

Sue (5:10 – 5:18)

About £15,000 a night. That’s a two-bedroom, four-bathroom apartment. So they are quite expensive, but I mean, wow, incredible.

Jimmy (5:18 – 5:22)

But that’s… I don’t think that’s going to hit it. I don’t think that’s going to hit the Airbnb market.

Sue (5:23 – 5:49)

That’s right. And interestingly, in London, you’re only allowed to let it out for, I think, 90 days a year. Is that right?

That’s the local authority’s limit. So in the same way that many places in Australia are putting limits on how many nights you can rent out short-term apartments, they’re doing exactly the same. We know they’re doing the same around the world, and in London, that even hits the hotel rooms that have apartments to rent.

Jimmy (5:49 – 6:36)

And moving on, because when we head off from Paris, on our way back to Sydney, we’re stopping in Vietnam, and we came across a few stories there about an apartment that they’re building there. They have the same issues everywhere in the world. America has a housing shortage, Britain has a housing shortage, Australia definitely has a housing shortage, and the same applies in Vietnam.

And we came across a story that announced the development of three apartment blocks in Hanoi, big ones, and casually said, most people can’t afford to buy these. So that’s the same as everywhere else. I have to say, I looked for those stories again this morning to get the details, and they seem to have disappeared off the website I was looking at.

But I mean, it’s just a universal thing, isn’t it?

Sue (6:36 – 7:00)

That’s right. I mean, there are a number of new apartments being built in Sydney, Melbourne, Brisbane, but they’re nothing. They’re just like a drop in the water for the housing crisis.

And most new apartments, they are far too expensive for first-time buyers to buy. Most of them are designed really now for downsizers, you know, baby boomers who have cashed up really and can afford them. So it’s very, very hard for everyone, I suppose.

Jimmy (7:00 – 7:46)

Now, last time I was in Vietnam, I was talking to somebody about the cost of apartment there, and he said it was ridiculous how expensive they were, that they were $1,000 per square So an apartment, 120 square meters would cost you $120,000. And I thought, how can I get some money into Vietnam quickly? But I suppose it’s all relative, because wages there are a lot lower than elsewhere.

There was a bit of a controversy with one, a few buildings in the north of Vietnam, where they were what we would call housing commission, and they discovered that the apartments were being let to non-residents, which upset a lot of locals. It just brings out the worst in people, I think.

Sue (7:46 – 7:50)

And it’s interesting seeing the housing crisis also hitting the U.S. election as well.

Jimmy (7:51 – 8:25)

Yeah, well, take a quick break, and we’ll talk about that when we come back. Because right now, we’re sitting here in Paris, and they are voting in America, and it will be tomorrow morning before we know even an indication of how things have gone. Talk about that after this.

You mentioned the election in America. It’s interesting that the two parties, the Democrats and the Republicans, almost mirror the argument, the debate in Australia about what’s causing the housing crisis.

Sue (8:26 – 8:50)

And more Kamala Harris, I think, what she’s saying kind of mirrors very much us, I think more, because she’s talking about it being a supply side problem. There’s just not enough housing being supplied, because most of it is being left to the private market to provide, and very little being provided by government. And that means very little housing that’s affordable and for social housing.

Jimmy (8:50 – 9:16)

On the other hand, predictably, Donald Trump thinks it’s a demand issue, and there’s excessive demand caused by, guess what, immigrants. And he is proposing that they’re going to free up federal land that’s not being used for other things, and make them tax-free, and no red tape areas where they can build more apartment people. You can just imagine how that’s going to end up, can’t you?

Sue (9:16 – 9:29)

Absolutely. And we’ve seen a bit of that over in Australia, haven’t we? Because we’re limiting now the number of international students who can come in every year, because we’re saying that that’s exacerbating the housing crisis as well.

Jimmy (9:29 – 10:07)

But Kamala, she wants a $25,000 loan for first-time buyers, which as we found in Australia, just inflates the market, but good luck to her on that. But she’s also going to put $40 billion into local innovation programs, which will include housing, increasing the housing stock. But they’re coming at it from very different angles, and that’s the problem.

It’s the same as the problem here, and I say here in Australia. People are saying there’s one solution, and there’s hardly anything in the world that only has one solution. It’s usually a mixture of ideas.

Absolutely, yeah.

Sue (10:08 – 10:56)

So I know it’s kind of interesting seeing these problems affecting everybody around the world. And it’s interesting as well, going into real estate agents and looking at the prices, the comparative prices of apartments, because in London, a small one-bedroom apartment would cost you pretty much the same as the median price in Sydney. And in Paris, it’s a little bit less, we’ve seen in real estate agents.

So it’s kind of, you know, it’s interesting looking at how they all compare. And obviously, in Paris, many of them only have tiny little balconies or Juliet balconies because many are old, or they don’t have the weather to have big balconies that they use a lot. So many people tend to prefer having little courtyards if they can, or they still have a lot of allotments as well, which I remember as a kid in London, there were lots of allotments with apartments, but I haven’t seen them for many years now.

Jimmy (10:57 – 12:23)

Well, that was because, well, people couldn’t have gardens, couldn’t have houses with gardens, but also they wanted people to grow their own food. That’s right. Because they were still struggling after the Second World War.

It was interesting looking in those real estate windows, you know, the apartment, they had the apartment size, and they had the location, and they had the pictures of the interiors, but they also had a scale from, I think, A to E, and I’m not sure what the scale was based on, but I have a feeling it was based on the location and the average price of apartments in that area. And so, you know, you could see, we were looking at one that was going, you know, it was going basically for about a million dollars for a two-bedroom apartment in the sort of outer ring of the city, not the outer ring, but the inner ring of the city. And it was about a million dollars, and it looked very nice, had big windows and nice views, and it was rated a D in terms, so we obviously weren’t looking at the most expensive, but we might look into that, what that rating actually means, and stick something in the show notes.

Right. We have to get packed, because we’re on our way to Saigon, Ho Chi Minh City, for people insist on using the official name, and we’ll be back in Sydney at the weekend, and the next time you hear us, we’ll be having a normal-length Flat Chat.

Sue (12:24 – 12:25)

Fantastic. Well, thanks for listening.

Jimmy (12:26 – 12:30)

And thank you, Sue, for giving up part of your holiday to be on the podcast.

Sue (12:31 – 12:31)

Pleasure, Jimmy.

Jimmy (12:31 – 12:33)

We’ll talk to you all again soon.

Sue (12:33 – 12:33)

Bye.

Jimmy (12:34 – 13:04)

Bye. Thanks for listening to the Flat Chat Wrap Podcast. You’ll find links to the stories and other references on our website, flatchat.com.au, and if you haven’t already done so, you can subscribe to this podcast completely free on Apple Podcasts, Google Podcasts, Spotify, or your favourite podcatcher. Just search for Flat Chat Wrap, with a W, click on subscribe, and you’ll get this podcast every week without even trying. Thanks again. Talk to you again next week.

 Transcribed by TurboScribe.ai.