When Reserve Bank governor Philip Lowe raised the prospect last week of people co-habiting with more housemates as rents rise, some lambasted him as if it was an aloof prescription.
But Lowe was merely describing what will inevitably happen if more housing isn’t built, amid concerns that fewer cranes are on the horizons. Last Tuesday, new data from the Australian Bureau of Statistics showed a large drop in residential buildings approved for construction.
Apartment construction in particular is at a 10-year low. Unsurprisingly this has contributed to the rental crisis. CoreLogic found recently that the rental price gap between houses and apartments went from $64 a week to $39 a week over the past 12 months.
Australians were building and moving into increasing numbers of apartments before the pandemic, albeit from a low base. But the overall share of detached homes in cities remains very high. And most new homebuyers still want to live in a three-bedroom detached home with parking. They are mostly economising by forgoing yard space, but not so much floor space.
Our apartment aversion is a particular cultural pathology — the Australian dream has long been synonymous with owning a big block with a huge backyard and a garage for multiple large cars. Indeed, the Commonwealth Bank found Australia has the largest average home size in the world.
But the only spaces left for such large blocks are in regional areas and on the outskirts of major cities, entailing long commutes to workplaces and key services. The lack of medium-sized options proximate to job centres just leads to “seagulls to chips” fighting for existing stock, rising prices and ultimately more would-be apartment dwellers cohabiting in lower-rise houses, usually with less space to themselves.
The “bigger is better” mindset can obscure such common compromises. For instance, Guardian Australia’s Amy Remeikis recently tweeted sarcastically that she is “looking forward to cramming more people into the tiny apartments developers built for our cities”, lamenting the lack of space and backyards. She’s not wrong that some inner-city developments, particularly those aimed at foreign students, have been veritable shoeboxes. But the sizes of average Australian apartments are growing, partly in response to new regulations.
Those used to roomy spare bedrooms too often imagine “cramming” when housing is vertical and separated, but don’t notice when it’s horizontal and shared. Yet if we want to give people their own space and privacy, building residences vertically is the realistic means.
I once lived in a three-bedroom share house that housed five people — a couple shared one room and one unlucky guy was squished into a converted office space. Crossing one’s legs in line for our single bathroom was not ideal.
For such share-housers, with a quarter-acre block barely affordable and hours away, the next realistic rung on the housing ladder is renting or buying an apartment. It’s our generation’s Australian dream.
But as apartment prices have risen, more people have been reverting to share housing. Flatmates.com.au welcomed its largest number of new users in May (70,000), up 70% from last year.
Living with housemates can be fun (or at least tolerable) while young, but it’s far from preferable for most over-40s. Yet the largest proportional increase in new flatmates.com.au users in the past 12 months is among those aged 55-64, followed by 65+. Conversely, 18- to 34-year-old users are declining, as fewer move out of their parents’ homes and some move back in.
Some media commentary has patronised such “boomerang kids”, chalking up their homecoming to “the lack of ability for the entire generation to individuate” and empathising with put-out parents. Sure, some needy kids might wrongly expect mum to do their washing again, but it’s hard to empathise with boomers who pulled up the housing ladder after themselves now facing familial inconvenience as a result.
Others have blamed the housing crunch on people spreading out during COVID, with the average number of people each dwelling dropping from 2020-22. The number of share houses accordingly decreased.
Housing think tank Prosper Australia reported that such spreading out lessened some of the rent drops predicted during COVID’s higher people-to-houses ratio. It thus argues we can’t build our way out of the housing crisis, as new builds just encourage more spreading out.
For those stuck in overcrowded share houses, spreading out is highly desirable. Less competition for each housing unit facilitated this during COVID — wouldn’t it be great if this was the case all the time? Whether it translates to lower prices or more diverse living options (or a bit of both), improving the people-to-house ratio reaps rewards. And short of returning to lockdown-era migration levels (undesirable for multiple reasons), the only sustainable way to do so is by building more apartments.
Yet even when building materials cheapen and construction rates bounce back, it remains too difficult to build apartments in the suburbs. NIMBY-ish concerns about street parking, overshadowing and undesirable youngsters disrupting the serenity have made urban densification unduly taxing.
If suburban mums and dads don’t want their adult children disrupting their retirement, or moving to far-flung suburbs where they’ll rarely see their grandkids, they’ll need to accept more apartment buildings rising above their familiar flat landscapes. Onwards is upwards.
Should we accept up not out? Let us know by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
i have benefited massively from being born in 1960. I got my undergrad degree with no tuition fees and a living allowance thrown in (UK) and I bought my first house aged 26 with my then partner and my second aged 28 after we broke up. Yes, I paid interest up to 17% on that loan, but the loan amount was only just over twice my annual income – must be more like 6 times now.
I acknowledge my luck, but I take offence at being accused of “pulling up the ladder” after me. I never voted for negative gearing or the disastrous capital gains tax discount. I haven’t negatively geared to build a property portfolio (not much chance on a single income) and I’ve paid tax willingly and without going beyond the standard charity donations and work-related expenses. I would vote for any and every initiative that stops the shift of wealth from the poorest to the richest.
#notallboomers -don’t tar us all with the same lazy brush
Yes, it’s annoying when we’re divided into generations, stereotyped and set against each other. As if it’s greedy individuals, not government policies, causing problems.
Often when marriages imploded the ex bloke could hide assests and avoid child support whilst he moved on with a you ger model and mum got the kids and one property nothing else was up to split in assets after a 15 year marriage anywho the expenses living teens trips fees etc were borne by the mum – she might go back to uni but be burdened by chimd care costs remmber second income wimen lost 75% of their wage if lucky enough to be part time in a 2 income household – the kids should get the property after mums demisr not property developers or aged care consortiums – it is not intergenerational theft it is cartel developer lobbists and cartel AGED care etc rorting our collective ownership
God Andy, but you’re hard reading! Still, I get you and I get susan. Same here… don’t tar me!. Lazy statement, Ben. You can do better!
Benjamin Clark says we need to ignore ‘NIMBY-ish concerns about street parking, overshadowing’ and accommodate the highest rate of immigration in the OECD by living in high rise concrete dog boxes.
FU Ben, NIMBY. I don’t need to do anything you opine.
+1
Any piece that uses the term NIMBY is guaranteed not to mention immigration.
Could have been written by the property council: subscription ending stuff.
well considered and written. Nice work. ?
It seems people like Ben want to force the problem back onto Australians – we have to change – instead of protesting the extreme levels of migration being forced into Australians without consent or discussion.
Another lame piece about housing that doesn’t touch population growth.
Honestly, why bother?
I recommend you live somewhere with declining population growth before you advocate for that.
Japan has one of the highest standards of living on the planet.
And the argument isn’t even for declining population (though that will have to happen, one way or another, so probably best to do it voluntarily), it’s for slower growth.
Don’t give up Kimba, you (we) mustn’t let them get away with it.
I’m with you Kimba. Addressing the supply side by insisting we destroy the character and the history of existing suburbs while diminsishing the amenity of existing residents is not an attractive idea. Why not address the demand side of the equation? Less migration equals less demand. I’ve never owned an investment property and I didn’t pull up the property ladder behind me.
The damage has been done by successive governments making themselves look good. They kept the economy humming along, increasing GDP with excessive population growth via migration. What they didn’t do was build the housing or infrastructure to sustain that population increase. That’s how the ladder was pulled away from the current generation.
And Ben mentioned overshadowing? One of my neighbours has just had three stories built the length of her propety on the northern side. At Melbourne’s latitiude, her choices for plants that will grow in most of the backyard at the new low-light levels are cliveas, moss, or astroturf.
Unfortunately, we cannot trust developers of apartments or regultion. major defects have been doing in relatively new buildings
That’s all part of this neo-liberal Utopia that we all now live in PS.
Yes as a Boomer I had a stint in some flats/units in the old days. However I will note that the streets were wider and street parking was a lot easier. Today they are off what I would call laneways and parking is ridiculious let alone having streets wide enough for traffic to pass.
The other aspect is facilities and burglaries. I am old school and never locked the door of any of the houses I have lived in. By contrast always lock multiple dwellings. My son and I have been robbed in over five units. (Unit, lockup, garage, etc.)
Appartment buildings need to also incorporate some functional facilities. Meeting room and say small workshop.
Then there is the social interaction. Legislation is skirted around when disabled car parking becomes a wash bay and parking for the ubiquitous tradie utes.
As is want with our governments, make regulations and then have the fairies enforce them.
Thanks for that reply Maroochy. I share your concerns. I would find it appalling to hear that you and your son have been robbed at all, let alone on five occasions! The issues that you raise in this post again cause me to wonder just where we are headed as a society.
Yes, you would be brave to buy a house built in the last twenty years and absolutely bonkers to buy an apartment.
Precisely the same comment was made to me by a young couple that my wife and myself were out for lunch with only a couple of weeks ago. It is indeed quite troubling that things in this regard are clearly going backward as the years go by instead of progressing. So much of the workmanship on these new dwellings is sub-standard (and I notice that “the market” does not seem to be rectifying the situation. What a surprise!)
If you can, go for Owner builds. From what I have heard from Builder and Engineer friends, OB buildings are more likely to be over-engineered.
I think people who comment need to come out to the suburbs and see what’s going on. Old houses, that had garden and lawns, are being torn down to build huge mansions, of one or two stories. They take up must of the suburban bloke, no front or rear gardens, Two car garages, in which spare furniture is stored, leaving space for one car inside. These days modern houses have 2 or 3 or more cars, one in the double garage the others parked in small street.
of course there are multiple cars, you can’t have decent public transport and low density, urban sprawl,
Exactly! And the converse is also true, in reasonably densely built cities where public transport is readily available, owning a car can be a pointless and expensive luxury/nuisance.
As I’ve already mentioned in another comment, there’s an excellent and highly relevant article in The Atlantic, 4th June, ‘How Parking Ruined Everything: America has paid a steep price for devoting too much space to storing cars’.
Even in countries with extremely high non-car modal share (eg: bikes, various forms of public transport), vehicle ownership rates tend to be in the same ballpark as, eg: Australia.
Which is to say, people are happy – even keen – to use public transport as a supplement to their private vehicles (because nobody likes sitting in rush hour traffic), but don’t consider it a replacement. You need to have actively anti-car policies to get people to start giving up their cars – they are simply to beneficial to abandon voluntarily.
Talking about countries is missing the point. My comment is clearly about fairly high density cities, not countries. And I only said owning a car can be a pointless and expensive luxury/nuisance. It’s easy enough to find significant numbers of people who live in cities with good public transport who do not own a car by choice. It’s absurd to say that must be the result of ‘actively anti-car policies’. It’s the result of decent city infrastructure and services.
But I will acknowledge that for a great many people owning a car is a deeply emotional need, addiction or obsession; and their response to any suggestion there could be a good alternative is typically hysterical and aggressive. No rational discussion of the subject can continue for long when they are involved.
It applies equally to cities.
And my point was not that individuals in cities choosing to live without cars are the product of anti-car policies, it was that if you want to produce that outcome at a large scale, you require anti-car policies, because people who have the ability to own a car, typically do, even when they are serviced by – and make use of – quality public transport. Indeed, they very often make sacrifices to own a car (which is to say, own a car even though it would be objectively cheaper to take taxis/Ubers and/or rent a car on an as-needs basis) even in those circumstances.
You can argue it’s because people are irrational, but the real answer is the exact opposite. Cars are extremely useful and convenient in ways even the best public transport cannot match – especially once children are involved – and people attach a great deal of value, which they are prepared to spend non-trivial amounts of real money on, to that.
You seem to be agreeing with me but not conscious of doing so. If someone in a city with decent public transport ‘makes sacrifices to own a car’ (your words) it only confirms that the ‘car can be a pointless and expensive luxury/nuisance’ (my words).
No, it means a private car provides a level of utility over public transport et al that they are prepared to pay a premium for.
Good grief your household must be grim if everything other than the barest functional necessities are considered irrational luxuries.
Boom tish! . . . although I suspect you are on a circuituous treadmill with some 🙂
Circuitous
PS, it is not possible for me to reconcile your claim that:
“….. you can’t have decent public transport and low density, urban sprawl, “
with my personal experience.
The area that I grew up in was, what you would describe as “low density” and part of the “urban sprawl” (to use your terms), and there was no shortage of nearby bus services and there was a railway line a couple of kilometers away. Where I currently reside there is a railway line about 8 minutes walk away and bus services nearby. And yet, because of the increasing number of blocks of flats going up and the erection of dual-occupancy homes, there are an increasing number of cars parked in the street.
Am building one of these now. Knocked down our old house after living in it for 10 years.
My son and I a few years ago could play cricket or tennis on our small street. Now we can’t as cars are all over the road parked (more people living in our street…..student housing). So I need to bulld a double garage to ensure our two cars can get a spot
You forgot the part where the old blocks were subdivided down into 400m^2 (or less) postage stamps. That is why there’s no front or back yard – because blocks are shrinking (while also dramatically increasing in price).
A “typical” new ~250m^2 two-story house has a similar footprint to the old single-story ~120m^2 house it replaced, and a decent chunk of that area is take up by the 2-car garage that the old house lacked.