Bold leadership in an era of distrust

Re-posted from Property Council of Australia

“In politics, there aren’t many issues that get people listening – but one of those is access to housing,” says the former prime minister of New Zealand, the Rt Hon John Key.

During his eight years in the top job, Key (pictured) pursued an ambitious reform agenda and won three elections – an achievement that most world leaders would look at with envy.

Key steered his country through the global financial crisis and a series of devastating earthquakes in its second-biggest city. When Key retired from office, New Zealand’s growth rate was among the highest of advanced economies around the world.

Before his political career, Key worked in financial markets and was head of foreign exchange at investment bank Merrill Lynch. Now chairman of New Zealand's biggest bank, ANZ New Zealand, and a member of the ANZ Group Board in Australia, Key is headlining The Property Congress in September 2018 to share his thoughts on ‘bold leadership’ in an era of distrust.

“Trust is something that is hard earned and easily lost,” Key says.

Over the last few years, Australians have witnessed an implosion of trust in institutions, including government, religious groups, the media and, of course, the banks. How should property leaders respond?

“The Royal Commission raises issues not about what financial institutions can do, but what they should do,” he says. In much the same way, property leaders have a responsibility to live up to their promises.

“Property is the single most important asset that most people will ever own. This places an enormous responsibility on developers and others in the industry to ensure that the product they promote is the product that they deliver – and that it lives up to community expectations”.

Bob Geldof stole the show at last year’s conference with a clarion call to the property industry, in which he argued that property was the “canary in the coalmine” for the broader economy. Unaffordable housing sat “deep in the centre” of people’s distrust in institutions, Geldof argued.

Key agrees that housing affordability is at the bedrock of “property-owning democracies like Australia and New Zealand”. Society suffers when “people feel locked out of the system because they are not able to afford a house”.

“There is a lot of academic evidence to support the fact that owning a home builds stronger communities and better outcomes for families.”

He points to a conversation with a magazine editor who told him “when circulation is down, we always put a house on the front cover because everyone is interested in real estate”.

While the property industry “can’t be expected to do it all on its own – particularly at the low-cost and affordable end”, Key notes the industry’s willingness to look for solutions. “Increasingly, at ANZ, we are seeing a real interest in developers getting involved in community housing and wanting to work with us to get build-to-rent off the ground,” he says.

Australia’s property fundamentals are solid and will “continue to be a beneficiary of strong migration, because it’s a country where people want to live”.

But the way Australians engage with their built environment will evolve as technology transforms homes and offices, as transport morphs into new forms of mobility and as robotics reshapes the workforce. These disruptions will bring great opportunities. “Just as some jobs finish because of technology, other jobs will start”.

“Remember, the trend is your friend. Because property is such a long-term investment, recognising and responding to trends is so important.” He points to the movement away from large houses as “status symbols” to smaller homes that “reflect a global lifestyle”.

“Property leaders must accept that they don’t understand everything yet – and build things that can change and evolve. Trust your instincts,” he advises.

“In politics, if something didn’t feel right, I learnt to avoid it. Occasionally that meant missing an opportunity, but if I didn’t believe 100 per cent in something, I wouldn’t execute the plan as well as I should.”

He says this is never more important in an industry like property, where “developers can be tremendously successful at one point and then lose everything”. One of New Zealand’s most successful developers told Key that he once held off making a single investment in seven years because the market didn’t feel right.

"Be patient. If your instincts are that something isn't right, or someone isn't right, or the market isn't right, then don't do it."

John Key will be speaking in Darwin at The Property Congress on Thursday 13 September.


Property Council of Australia article 7/8/18