A FREE-STANDING HOUSE IN THE SUBURBS IS ABOUT AS AUSTRALIAN AS VEGEMITE. BUT FOR HOW MUCH LONGER?
ONE OF THE DRIVING FORCES behind jobs and prosperity in the Australian economy is the housing industry. More people require more dwellings and in a growing nation such as ours this sector has been a stalwart of prosperity since the end of World War II. And it makes sense. Large-scale immigration delivering about six million people in 60 years has naturally had a big impact on housing demand. As indeed has social change. Out with mum, dad and the kids; in with apartments in the city centre for singles and couples.
This nation produces more than 100,000 new dwellings a year, or at least it has done so since 2000. But there are variations to this demand, affected by population growth (mostly migration) and changes in household structure.
While population growth is clearly tracked, what we are less clear about is how social change is shaping households. The 2011 census counted 7.75 million dwellings in this nation to accommodate 22 million residents. Five years earlier there were 7.14 million dwellings. That represents a net gain of 613,000 dwellings, or an average of 123,000 per year. Almost two thirds (64 per cent) of net additional dwellings between the census years were detached dwellings on separate blocks of land. Between the 1996 and 2001 censuses, separate houses comprised 65 per cent of net new dwellings.
For all the hype about apartments and other “modern” dwelling forms, the traditional separate house remains by far the most popular form. (Though I suspect that traditional house has changed mightily over the years.) The balance of the net new dwelling market is split more or less evenly between semi-detached (say, townhouses) and apartment forms.
While this data is all very interesting, it isn’t the main game. Astute chief executives and businesses look beyond the outward expression of demand and consider what is known as the demand drivers. What is it that drives demand for separate houses, as opposed to semis or apartments? The answer to that question also lies in the census results and specifically in the questions about household structure.
Between 2006 and 2011 the number of dwellings might have grown by 613,000, but the number of households increased by 653,000. In some cases, more than one household can live in a dwelling, as in group or share households and even within the multigenerational households favoured by some ethnic groups.
Households are typically broken down into six types, with the main ones being: couples with children, i.e. “families” (2.5 million); couples without children (2.2 million); lone persons (1.9 million); and single parent (900,000).
The type of household that is most likely to require a separate house is families and in the five years to 2011 this segment accounted for 26 per cent of net household growth. Couples without children (including young, hip, double-income-no-kids households and retired couples) accounted for 32 per cent of new households and lone persons for 23 per cent.
So what’s really interesting here is that if separate houses account for 64 per cent of net new stock (as measured by the census), yet couples with children account for just 26 per cent of net new households, then perhaps as much as half the demand for separate houses is coming from couples and singles.
Now, to some extent, this is to be expected, as a young couple will buy a house with the expectation of raising a family. And there are obviously many couples and singles who, for whatever reason, enjoy the space and the privacy of a separate house as opposed to a semi-detached residence or an apartment. But it is the scale of the difference between the demand driver (families, basically) and the outcome (separate houses) that is of most interest – and of most concern.
My worry is that a large segment of the population wants a separate house purely because that’s what they were brought up in, because it is the cultural norm, rather than because it meets their needs. And I am sure this preference by couples, families, singles and one-parent families will continue.
However, logic dictates that the market will correct itself eventually. If the rate of growth in families slows, so will the demand for separate houses. What is holding up the market for separate houses is, in fact, a very Australian desire for space.
This cultural predisposition for separate houses may be supported by all manner of household types into the future.
But there is also the chance of a shift within, say, a decade, in which singles, couples and others no longer see a need for as much expensive space.
On this basis, while the demand for housing is unlikely to abate over the next decade, what might alter is the fundamental mix of housing: out with suburbia; in with apartmentia. The demand drivers are pushing households and possibly housing forms in this direction. The only thing holding Australia back from a bigger move in that direction is our cultural preference for separate houses in suburbia. Perhaps the Australian nation will let go of this dream in the 2010s. Perhaps by the middle of the 21st century we will celebrate not the Hills Hoist in the backyard, but the Hibachi barbecue against the wall on the apartment balcony.