Sydney, Melbourne Facing 'Housing Crisis', Says Report

Published : 18 January 2016

A fascinating report on housing affordability, written by Bob Birrell and David McCloskey for the Australian Population Research Institute, says Sydney and Melbourne face a serious housing crisis.

The report says the shortage of affordable separate housing stock already means that most first home buyers and renters cannot currently find housing suited to their needs in locations of their choice, either in Sydney or Melbourne. 

It also suggests that the problem goes beyond simply finance, and will need new government policies to address the issues.

Considering the type of housing needed to suit different stages of peoples' lives, the report says new households are being formed from people arriving in Australia, and from residents starting independent living. The projections suggest that net overseas migration will continue at 240,000 a year and that Sydney and Melbourne will continue to receive almost half these migrants. If so, Sydney will have to add a total of some 308,000 dwellings and Melbourne some 355,000 over the decade 2012 to 2022.

Younger households are experiencing an unprecedented squeeze when entering the housing market in major cities. This is because of an increase in the number of older households, due to population ageing.

There will be enormous growth in the number of households where the householder is aged 45 or more years. Most of these will be couple households as the children leave home or single person households as one or other of the partners die or move into care. This is a consequence of population ageing.

It seems these older households are in no hurry to leave their properties or downsize. In fact, the share of older households living in detached dwellings doesn't start to significantly decline until the age of 75.

With a finite supply of separate houses in suburbs within 10km of the CBD, this means young people keen to leave apartment living and move into separate houses to start a family are missing out.

Within the cities themselves, the demand for land within high amenity areas makes the resulting dwellings too expensive for most people.

Many population growth and housing experts, such as the Grattan Institute, believe all of these factors will create a more positive attitude towards apartment living in the future.

The Australian Population Research Institute says this might be the case if the small households in question were all young, but they are not.

They conclude that any serious evaluation of the housing needs of households in Sydney and Melbourne must begin with an accurate mapping of projected change in the number of households by household type and age.

They say the situation won't fix itself and the changes required could be drastic, such as reducing the number of migrants. They say young adults are likely to stay at home longer and put off having children, and others are likely to move out of the cities.

They say the results are "potentially game-changing' for Sydney and Melbourne.