Survey indicates growing demand for units

By Terry Ryder, 21st June 2011

The difference between aspiration and action in real estate has been highlighted by a new survey by the Grattan Institute. It shows most people want to live in a large house close to city. But, when confronted with the reality of cost versus income, they'll go for an apartment or a townhouse. Fewer than half would buy the house on land.

This survey of 706 people in Melbourne and Sydney demonstrates why the expensive inner-city suburbs don't deliver big capital growth. Many aspire to live in a house Toorak or Mosman but can't afford it so their demand goes elsewhere. It goes to markets they can afford, like a house further out or an apartment closer in.

One of the conclusions from the The Housing We'd Choose report is that Sydney and Melbourne are not building the housing people want and can afford. This prompted the usual silly treatment from newspapers, like this from the Herald Sun in Melbourne: "The great Australian dream of owning a house on a quarter-acre block might no longer exist." There is no limit to the crassness of journalists.

Most people want to live in a large detached house but when factors such as housing prices, income and location are considered, people make ''trade-offs'' - they compromise on size, housing type and location.

The Grattan Institute report says there is "a clear mismatch" between housing stock and the mix respondents would choose to buy. One conclusion is that there should be more semi-detached houses and apartments built. Australians want more units and townhouses in the more desirable areas, it says.

"There are a lot of myths and assumptions about housing, and what Australians want," the Grattan Institute's Jane-Frances Kelly says. "If you ask them, they will tell you a lot of factors play a role, and many people make a choice to live in a townhouse or apartment if it means they can live in a particular area."

Just under 50% of those surveyed in Melbourne indicated a preference for detached housing; the remainder opted for high-density housing. The survey found that after taking into account financial constraints, 48% of Melburnians and 41% of people in Sydney would choose a detached house.

And one in five Sydneysiders would choose to live in an apartment in the outer suburbs or city fringes, while one in 10 people in Melbourne would be happy to make that choice.

As a result, the report finds that we need more semi-detached homes and apartments in the middle suburbs and on the fringes of Sydney and Melbourne. But the construction industry isn't catering for these real-world choices.

"Construction of new dwellings in the last 10 years has not reduced the gap between the housing people say they want and the housing we have," the report says. "In Sydney, the volume of construction has contracted sharply. In Melbourne, detached homes in outer and fringe areas have predominated, a construction pattern that moves us further away from the city structure residents say they want."

ENDS

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