Accord QS – Not enough Homes
There are not enough homes being built for families, in Australia.
Wind back to the mid-1980s and single detached houses accounted for more than three in four new dwellings approved for construction throughout Australia.
Today, however, and more than four in 10 approvals nationally are for semi-detached or non-detached dwellings (townhouses, units, flats and apartments). Over the past three financial years, these have accounted for more than two-thirds of housing units approved in Sydney and around 55 per cent of those for which permits have been granted in Melbourne.
According to one narrative, this is a welcome development. Under this line of thought, non-detached dwellings will grow in popularity amid a combination of shrinking family sizes and a growing proportion of households without children; a growing desire for housing within close proximity to transport links and opportunities for employment, recreation and cultural enjoyment; an increasing population of migrants who (especially many from Asia) are accustomed to apartment style complexes; downsizing amongst older households and a broader desire to limit urban sprawl.
Why, renowned commentator Bernard Salt wrote in The Australian earlier this year, would you exist in the ‘sparse, lifeless and frankly naff suburbs’ when you could live amid the ‘vibrancy and the opportunity of all the inner city has to offer’ with connectivity to the best, jobs, shopping, cultural and sporting facilities and parks and gardens?
At face value, some data appears to support this view. In the most recent version of its Victoria in Future report, for example, the Victorian Department of Environment, Land, Water and Planning said the number of households made up of families with children will drop from 43.2 per cent to 41.8 per cent over the period spanning 2011 to 2021.
Such assumptions, however, are being challenged. In their first of two reports about what they say is a crisis in housing affordability throughout both Sydney and Melbourne, Monash University Centre for Population and Urban Research president Dr Bob Birrell and founder of Melbourne-based economic research outfit Sensing Value David McCloskey talk of a ‘serious mismatch’ between the dwelling preferences of households over the decade to 2022 and current patterns of new housing provision as implied by building approval data.
According to calculations based on a range of data extracted from ABS sources, Birrell and McCloskey acknowledge that the combined number of lone person households and childless couple households will increase by almost 190,000 over the decade to 2022 in Melbourne and more than 176,000 in Sydney – accounting for just over half of the overall increase in household numbers throughout each city during that time-frame. However, their projections also show that the vast majority (around three quarters) of occupants within these childless households will be aged over 45 and actually comprise not so much of those who will never have children or are yet to have them but rather more so of those whose children have left home.
Given that these households have a relatively low propensity to move or downsize until they reach at least age 75 and are unlikely to be suited to high-rise living, the notion that growth in the projected number of childless households necessarily correlates with a desire for living in micro-sized apartments is flawed, they say. Indeed, they argue that such households are likely to continue to occupy their existing (often detached) dwellings.
At the other end of the scale, young singles and childless couples may initially be suited to high-rise, but this changes when they have children and thus require family-friendly housing. The upshot, Birrell and McCloskey say, is that should current dwelling approval patterns fail to adjust, a shortage of 28,500 and 19,000 detached houses will emerge in Sydney and Melbourne respectively by 2022 and the affordability crisis within middle suburbs will intensify as a growing cohort of older residents refuses to make way for the new generation of younger families. At the same time, a glut of 59,000 and 123,000 oversupplied apartments in those cities respectively will mean itinerant residents and young professionals without children will be ‘spoiled for choice’ should they opt for this style of dwelling.
While acknowledging that in practice that the actual situation will most likely not work out exactly as per the assumptions in the calculations, the researchers say the data exposes deficiencies in common assumptions surrounding the extent of the move toward demand for apartment type living.
“The household projections that the planning industry and most of the housing industry depend on do not provide projections which indicate the growth in households by family type and by age group,” Birrell said.
“That’s basically because there is a very large cohort from the younger household resident population who are going to be looking for housing over the next decade and most of them will form relationships and have kids. When they do, if they can, they will seek a family suitable house and preferably a detached house. So there is a very strong demand for this type of housing that is not properly recognised in the planning literature.
“But secondly, none of this literature takes account of the effect of aging over this decade (2012 – 2022). That effect is very large because we are in a unique demographic situation at the moment with large numbers of older household in the 45-to-64-year-old age group. Over this decade, they are going to be replacing cohorts which are much smaller. As a consequence…the number of available family suitable houses over this decade is going to shrink because so many of them will be occupied by older households.”
The new study comes amid ongoing debate about how Australia can house a growing population within reasonable proximity to employment opportunities and increasing levels of concern that the main forms of new housing being created are either high-rise apartments which are not typically considered to be compatible with the needs and lifestyles of families.
In his book City Limits, published earlier this year, for instance, Grattan Institute researcher Paul Donegan argued that part of the answer revolved around greater levels of medium density development in middle suburbs.
Should nothing be done, Birrell says affordability will deteriorate throughout Sydney and the middle suburbs in Melbourne, with a reasonable supply remaining in Melbourne’s outer fringe. As a consequence, Sydney will most likely see more townhouses and walk-up type unit and apartment complexes as well as a number of people being forced to live in satellite cities instead. In Melbourne, the urban sprawl will continue notwithstanding ongoing objections about this taking place.
He says master planned developments on a grand scale where the state buys up large chunks of land are an ideal part of the solution but adds that many planning authorities are reluctant to countenance that over concerns about interfering with the free market for housing provision.
“At the moment, we are stymied,” Birrell said. “So in Sydney, the affordability crisis is going to get worse, and in Melbourne, it will get worse too in the middle suburbs.”