Last week’s post sparked a bit of conjecture with a select group of town planners, some developers and inner-city leftie types who, in summation, told me that my future detached housing demand figures were way too high and that many more people will live in apartments and other attached homes across SEQld in the future.
Let me paraphrase some of the replies I got.
Suburbanites are wrecking the planet!
We cannot afford to keep building more infrastructure so far away from the centre of town.
There is way too much traffic – we don’t need anymore – people living in apartments don’t use their cars as much as people who live in houses. We use public transport.
No wonder Australian’s, on average, are getting obese. Too many live in suburbia, they exercise less and have to drive everywhere.
And if the last reply didn’t have you shaking your head, then wait for it…
Covid infections are higher in the suburbs. Fact! Apartments are safer as we can lockdown more easily. Many of us can walk to things, not drive or even need to catch public transport. More will opt to live downtown and in apartments in the future. It will be safer. We should mandate that this happens.
Well, my aim isn’t to bust these cat’s bubble. And I definitely don’t want to enter the Covid debate. Well not this Missive!
Plus, I am not against inner city living, apartments or other types of attached dwellings. In fact, far from it. Much of my firm’s project advice over the past 25 years has been helping attached dwelling based developments achieve a better market match.
But for those that are interested in debunking some of these urban myths go here.
My intent this post is to outline the likely size of attached dwelling demand across SEQld in coming years and highlight some issues the region faces – with regards to housing a growing population – given the current planning mindset that attached dwellings, and in particular apartments, will satisfy much of the future dwelling demand.
To assist, I have included three tables and a chart. These are at the end of the post.
Attached dwelling demand
I estimate that there is annual demand to build some 4,700 new attached dwellings across SEQld over the next five years. The underlying demand for detached houses is double this volume. Revisit last week’s post.
In contrast to the detached housing market, the SEQld attached housing market has a lot more potential to oversupply the market over the next five years. The total underlying demand for attached dwellings between 2021 and 2026, I estimate, is around 23,500 new dwellings, yet the potential supply (and expected take-up by state and local government planning) exceeds 62,000 dwellings. See table 1.
In contrast to the overall SEQld trend, the municipalities of Brisbane, Moreton Bay and the Sunshine Coast, could face an undersupply of new attached dwelling development opportunities in coming years. Again, visit table 1.
But one must consider that much of the attached dwelling developments approved have yet commenced. This overhang amounts to some 3,250 developments and totals over 113,000 attached dwellings.
In addition, there were 66,000 new attached dwelling approvals across SEQld over the past five years, so this yet built but approved attached dwelling supply, is 1.7 times larger than all of the new attached dwellings built across SEQld between 2017 and 2021. See table 2.
The chart illustrates that over 50% of new approved attached dwellings have yet to be built across Queensland in recent years, whilst the proportion of delayed detached housing starts averages just 15% over the same time frame.
It is true, in general, that the economics of delivering attached dwellings is often harder than for detached product. But also, investors mostly buy attached dwellings whilst many more owner residents buy detached homes. Go here for more.
The investor market is more easily spooked and hence is much more cyclical when compared to owner buyers and attached dwelling demand suffers as a result.
Also, as I discuss in detail in my Master Class sessions, ‘density needs to be offset’.
The smaller one’s private dwelling space the larger (and better) the surrounding public space needs to be.
Whilst SEQld is improving in this regard, I do wonder if it has enough offsets (in short amenity) to cater for the expected uptake in higher density living.
And folks hosting the Olympics and building a few more white elephants doesn’t cut it.
Many apartment residents live alone or in a couple relationship. Most are young.
What do young people want when it comes to amenity? That is the question. I can tell you from our work that it isn’t the big infrastructure spends but the stuff in between the buildings and the grandstanding monuments.
You need funk, spunk and vibe.
But maybe that too is no longer allowed to enter the state?
Anyway I digress.
Finally, table 3 shows that about three-quarters of SEQld residents live in detached houses and some 27% reside in attached dwellings. True the proportion of people living in detached houses has fallen from about 80% twenty years ago to about 73% today, but in recent years the rate of this decline has slowed down.
Table 3 also shows that 2.9 people typically reside in a detached house (across SEQld) and 1.9 people, on average, live in an attached dwelling.
Importantly table 3 indicates that the proportion of unoccupied attached dwellings is twice as that when compared to detached homes.
Most people prefer to live in a detached house. Their families and possessions fit better. They often have room to grow, and they can improve the property over time.
Our work suggests that renovating a detached house offers more upside when it comes to resale value when compared to improving at apartment or townhouse.
Also, when factoring in all costs, including travel, detached housing is often more affordable. This is especially the case when it comes to families.
Importantly, detached housing is mostly on freehold title. Australians don’t seem to like community or building title. Such schemes are often viewed as a fourth tier of government. Many also don’t see the value in body corporate fees.
Many of us also like a connection to the ground. Gardens are important. So is the backyard BBQ, or fire pit, these days.
Yes, you can BBQ on your balcony or visit the roof top garden in your apartment complex, but our interviews with apartment residents suggest that whilst this was the intent when buying, after moving in, it rarely happens.
Again, I am not anti-apartments, but with such headwinds it takes a lot to make a good apartment (or townhouse) complex. Go here to see my list of things that I think make a better apartment.
Also, there is nothing wrong with suburbia. This is where most people live. Yet in SEQld’s case, too much public infrastructure is focused downtown. The 2032 Olympics win will further entrench this trend.
Plus, more people are actually housed in detached housing (when factoring in household size and occupied stock) than attached dwellings.
So, if accommodating a growing population is the goal – and of course accumulating development and associated taxes and charges along the way – then the plan should be to better cater for the market demand and, in this case, accommodate more detached product.
This can be done by allowing owners to maximise (with limits) their existing land by building granny flats or via subdivision. Smaller lot sizes should be encouraged. As should co-living and dual occupancy housing.
So should detached housing and/or freehold title dwellings solutions when it comes to the ‘missing middle’.
Plus, if group governance (and their fees) are part of the problem when it comes to accepting attached dwellings, then allow some urban housing forms like townhouses, terraces and ‘plexes’ to be governed by the owner and not a body corporate. This happens interstate – with much success – so why not across SEQld?
And yes, all this can be done without carpet bombing the suburbs.
The demand for detached housing is high and will remain so. For most this form of housing makes the many economic and demographic sense.
For mine, urban regions that cater for this demand will be more desirable than areas that don’t.
Apartments and the like are an important part of the housing mix, and they will continue to grow in popularity, but this latent demand is far less in SEQld than the planning intelligentsia think.
Yet the demand for attached dwellings can be lifted. To do so needs a major rethink. It involves more offsets. This is often the soft stuff.
Build it and they will come just won’t cut it.