HOM­ING IN­STINCTS

A FREE-STAND­ING HOUSE IN THE SUB­URBS IS ABOUT AS AUS­TRALIAN AS VEGEMITE. BUT FOR HOW MUCH LONGER?

The Australian - The Deal - - Resources Tasker - BY BERNARD SALT

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.

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