Summary
Housing matters. Building enough of the right housing not only provides for our individual choices, but also sets the structure of our cities, which, in turn, can affect issues such as the time we spend commuting (and in congestion), the cost of infrastructure, even the continued concentration of economic and social vulnerability at the fringes of our cities.
This report explores the relationship between the housing we say we want and the housing we have. It tests a hypothesis that housing demand and housing stock do not meet: in other words, that the housing in our cities is not a good match for the choices and trade-offs that people would make if they could.
The report is in two parts. To bring data to a discussion that can sometimes seem evidence-free, Grattan commissioned a survey of more than 700 residents of Sydney and Melbourne to discover their housing preferences. The survey asked respondents what home they would like to live in, taking into account realities such as current housing costs and their income. This often required respondents to make trade-offs between size and type of housing, and its location.
Once these trade-offs are taken into account, big differences emerge between the housing Australians say they’d choose and the stock we have. In particular, there are large shortages of semi-detached homes and apartments in the middle and outer areas of both Melbourne and Sydney.
Construction of new dwellings in the last ten years has not reduced the gap between the housing people say they want, and the housing we have. In Sydney, the volume of construction has contracted sharply. In Melbourne, detached homes in outer and fringe areas have predominated.
If people say they want different types of housing, why aren’t they being built? The answers are largely to be found in the incentives facing residential developers. Through interviews with developers, banks, builders, councils and others, along with our own analysis, we discovered a range of reasons why some housing types are not being built where people say they would like to live. These include financing practices, planning and land issues and material and labour costs.
If we are serious about shaping our cities in the directions residents say they want to see, the incentives facing developers would have to change.
Once housing is built, it lasts for a long time, and can be costly or impossible to modify. For this reason, it is urgent that what people say about how they want to live is embedded in all our discussions about housing in Australia.
We should not be afraid to shape our cities: otherwise we risk them shaping us. But we should shape them in accordance with what Australians say they would choose.
The report also examines recent construction trends and argues that there are barriers to delivering more of the housing people say they want. These include the cost of materials and labour for buildings over four storeys, land assembly and preparation, and the risk and uncertainty of our planning systems, especially in Victoria. A subsequent report will recommend changes to the design of the housing market in order to provide people with more of the homes they say they want.