Why living 80s style would mean we'd need 1.2 million fewer homes
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Why living 80s style would mean we’d need 1.2 million fewer homes

The housing crisis could be addressed without the need for more dwellings, the RBA assistant governor says

By Bronwyn Allen
Tue, May 21, 2024 10:20amGrey Clock 3 min

The Reserve Bank assistant governor says how we live now is contributing to the housing shortage.

The National Housing Accord announced by the Albanese Government aims to build 1.2 million new well located homes over the next five years, starting from 1 July. The Accord is an agreement between the Federal Government and the states and territories to work together to raise the supply of homes. It begins with $3.5 billion in federal funding and the states and territories undertaking expedited zoning, planning and land releases to facilitate new building.

All of this is happening amid a housing crisis that has seen rents and home values both skyrocket by more than 40 percent since August 2020, according to CoreLogic data. Demand for social housing is also high, while post pandemic immigration has put further pressure on the market, and dwelling approvals per capita are at decade-lows amid high interest rates and higher materials and labour costs.

But there’s another way to fix it, says RBA assistant governor Sarah Hunter. We could just go back to living like we did in the 1980s. Back then, households were larger in size. That is, the number of people per household was higher at 2.8 people per home compared to 2.5 now. That may not sound like much of a difference, but Ms Hunter says if we reverted to this we’d need 1.2 million fewer homes right now.

In a speech last week on housing market cycles and fundamentals, Ms Hunter said that underlying demand for housing – be it rental or ownership – is determined by the size of our population, currently 27 million, and the average number of people living in each of our 11 million homes.

Ms Hunter said Australia typically has faster population growth than other advanced countries, driven by net overseas migration. In FY23, new overseas migration totalled more than half a million people. She also said the size of Australian households has been trending lower over the long term, mainly due to demographic factors. These include an ageing population, which means we have more elderly Australians living alone or in couple-only households; as well as a falling birth rate, which is reducing the average family size.

While the demographic trends that drive housing demand tend to occur slowly, the pandemic sped them up. During the pandemic, there was a shift in preferences towards more physical living space per person ... This was particularly the case for people who shared a home with non-family members, such as young people living in a flat share,” Ms Hunter said. This group shrank as a proportion of households, while the share living with their partner increased – as a result, the average household size declined.

She added: “The shift to working from home has also reinforced this change. While some people have returned to their workplace full time, there has been an increase in the proportion of people working from home – for many, a home office space is now highly desirable. This suggests that the recent falls in the average number of people per home will be at least partially permanent.

When housing demand rises, supply usually responds through new building activity. But the time this takes can vary, depending on rental and housing prices, underlying construction costs and the time required to design, approve and build. In the meantime, property prices and rents adjust in line with the extent of the demand and supply imbalance.

The pandemic period – and its aftermath – stands out as a particularly sharp cycle,” Ms Hunter said. Growth in demand for new dwellings slowed rapidly in 2020 before rebounding strongly, partly due to the HomeBuilder program. But supply did not respond normally, with completions trending lower over the past five years due to a “perfect storm” of challenges in the construction sector.

They began with COVID-related supply chain disruptions that made it difficult to source materials, fixtures and fittings. Materials and labour costs went up, and a combination of shipping delays and labour shortages significantly extended building timelines. Today, supply chains have normalised but costs remain nearly 40% higher than in 2019 and the pipeline of new builds is clogged.

Additionally, major new projects are typically funded by debt, so higher interest rates are also reducing the viability of new builds. Many developers have delayed projects because of higher costs relative to anticipated returns. Meriton founder Harry Triguboff recently told The Australian that government and council approvals take too long and “it is harder to sell apartments now than ever before” due to high interest rates and fewer Chinese buyers.

Ms Hunter said easing zoning and planning restrictions and streamlining approval processes could reduce costs and lift supply but it will not be a quick fix. She concluded: “upward pressure on rents and prices will remain until new supply comes online.



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11 ACRES ROAD, KELLYVILLE, NSW

This stylish family home combines a classic palette and finishes with a flexible floorplan

35 North Street Windsor

Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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Property of the Week: 8-10 Howard St, Kew

Home to Sir Robert Menzies and Dame Pattie, this grand Melbourne estate is a piece of Australian political history.

By Kirsten Craze
Mon, Feb 17, 2025 2 min

It may be a well-worn cliche, but if these walls could talk there would be plenty of state secrets to share. The landmark residence at 8-10 Howard St, Kew was once the private residence of Sir Robert Menzies and Dame Pattie between 1929 and 1949, during the Prime Minster’s first term in the top job. He later held the role again from 1949 to 1966, making him Australia’s longest serving Prime Minister.

Historical land records indicate that the Howard St property was sold to Leonard Clinton Shaw, brother-in-law of Pattie Menzies. Robert and Patti then moved to live into The Lodge in Canberra.

The stately arts and crafts era home was built in the 1910s and has reportedly played host to a long list of dignitaries and VIP guests. As rumour has it, the drawing room of the Kew property is where Menzies crafted his iconic speeches and held many clandestine meetings.

Today the imposing five-bedroom residence, which sits on a vast 1874sq m land parcel in the coveted Studley Park precinct, has come to market through Marshall White agents James Tostevin and Chris Barrett with a price guide of $8.3 million to $8.9 million.

According to CoreLogic, the property last sold in 2018 for $7.75 million.

Beyond the expansive parklike grounds that to pay homage to celebrated Australian landscaper Edna Walling, the two-storey house is packed with meticulously maintained period features.

Showcasing the best of arts and crafts design influences, the home has a charming tuck-point brick façade, a tessellated tile veranda, coloured leadlight glass windows, dark stained wood panelling inside, as well as high decorative ceilings and cornices.

The large foyer divides the lower level into two distinct zones; big formal rooms and more casual family-friendly spaces. Built for entertaining on a grand scale, both the lounge and dining rooms rooms have original fireplaces and open out to either the undercover veranda or enclosed sunroom.

Also on the ground level, a spacious family room with yet another fireplace connects to an everyday meals area, and the contemporary kitchen comes complete with granite surfaces, a Paul Bocuse stove, an integrated Miele dishwasher, a walk-in pantry and wine cellar. A home office, or potential guest bedroom, plus a large laundry and two powder rooms round out the lower level floor plan.

Up via a majestic timber staircase, four big bedrooms have fireplaces and built-in wardrobes, while the primary suite is home to a palatial ensuite and dressing room. This accommodation level also houses two family bathrooms and a rear balcony that overlooks the grounds.

Outdoors there are multiple lifestyle features including a north/south tennis court with lighting, a unique rounds swimming pool and all-weather terraces.

Other features include an alarm, hydronic heating, a 60,000L underground tank, a garden shed, a remote double garage and additional off-street parking.

Located on the old Oakland Estate, the Menzies’ former home is close to popular eateries, Xavier College, St Vincents Private Hospital and golf courses.

 

Expressions of interest close on March 11, at 5pm for 8-10 Howard St, Kew. The home is listed with a price guide of $8.3 million to $8.9 million through agents James Tostevin and Chris Barrett of Marshall White.

MOST POPULAR
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This stylish family home combines a classic palette and finishes with a flexible floorplan

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Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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