Around 1.5 million new homes were built over the last decade, but growth of housing stock was uneven and diversity fell, according to a new report from the Australian Housing and Urban Research Institute.
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Three key takeaways:
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The uneven distribution of housing supply 2006–2016, undertaken for AHURI by researchers from Curtin, Sydney and Adelaide universities, examines the quantity, composition and distribution of new Australian housing supply, and examines the factors that influence the local rate of production.
“We wanted to understand patterns of new housing supply, whether supply is driven by price or other factors, and what government could do to encourage new supply in specific locations,” says lead researcher Professor Steven Rowley from Curtin University.
The report reveals an uneven distribution of new housing in all mainland capital cities. Sydney demonstrating the most even balance between inner, middle and outer area supply.
“When considered in relation to population numbers, the distribution of new supply was quite even across Greater Sydney,” Rowley says.
“In contrast, Greater Melbourne saw strong supply in its inner and outer areas, but little in established middle areas while supply in Perth and Adelaide was mostly on the urban fringes.”
Relationships between new housing supply and price change are complex, with cheaper, greenfield housing areas typically recording modest price growth, but areas of pronounced multi-unit development experiencing higher price inflation over the period.
Rowley says the research team was interested to find that, over the 10 years, local government areas that delivered more housing supply had below city average house prices.
“In fact, all of the high-supply LGAs in Perth and Brisbane were low-value areas. The outlier was Sydney, but even there 40 per cent of high-supply LGAs had a price below the city average.”
The number of three-bedroom dwellings fell from 47 per cent to 42 per cent of all housing stock, while the number of four-bedroom dwellings rose from 23 to 27 per cent.
“During the 10-year period we can argue supply actually became less diverse with an increase in the proportion of larger houses in most cities. This runs contrary to the policy direction within states and territories designed to increasing dwelling choice,” Rowley adds.
The research found that the key drivers of new supply were the availability of sites – but critically sites where a developer was able to profitably deliver development.
“Ultimately new dwelling supply relies on the private sector to be able to make money to compensate for the risk of undertaking development.
“If there is no profit there is no development, so market conditions must be right. Government can help by making the development approval process as efficient as possible and monitoring the costs of urban regulation,” Rowley concludes.
Download AHURI’s report: The uneven distribution of housing supply 2006–2016.