For many, talk about the Australian dream evokes images of a house and quarter acre block in the suburbs.
In recent years, however, skylines of Melbourne, Sydney and Brisbane have been dotted with cranes putting up massive apartment complexes.
Despite being at odds with traditional notions of Australian lifestyle, inner urban apartment living has been promoted as an alternative to urban sprawl which offers proximity to inner city social, cultural and employment opportunities.
Yet if the latest Census data is to be believed, it appears that Australians are not yet embracing apartment living in large proportions. Between 2011 and 2016, data from the respective Censuses in those years indicates that the proportion of Australians who live in apartments contracted from 14.6 percent to 14.1 percent. Whilst population growth has dictated that the number of those living in apartments has increased from 1.334 million to 1.398 million, the proportion of Australians living in apartments in fact appears to have stagnated at best.
That raises questions about whether Australians really want to live in apartments or will be forced to in some localities because that is all that is being built and on offer.
According to veteran property commentator Ross Elliott, the answer to the first question is largely no. Whilst acknowledging that inner urban apartment living does suit some, Elliott says much of the apartment building boom has been driven by speculative investment rather any noticeable shift in occupier living preferences.
Whilst many in Singapore or Hong Kong live in apartments, Elliott says there is no reason for Australians with an abundance of open space to do likewise. Moreover, he disputes common notions about employment opportunities migrating inward toward city centres. When employment related data associated with the Census comes out later this year, he expects the proportion of jobs located in the inner city relative to suburban locations to have shrunk – as he says it has done in previous Census surveys. Indeed, he says that more than 80 percent and in some cases 90 percent of jobs are located not in city centres but rather in the suburbs.
“What I have been saying for some years in that this apartment lifestyle was never embraced to the extent that the inner-city boosters claim,” Elliott said.
“There has been a confusion between what was a very saleable financial product being gobbled up by speculative investors with insatiable appetites who do not care about the small size of the apartments because they have no intention of living in them themselves with a change of housing type preferences by Australian people.”
“I never thought that would be the case and all the Census is showing is exactly that. In fact, I think what we will learn over the next couple of years is that is that it (the apartment construction boom) has been driven almost entirely be spectators and not by a change of housing preference.”
Professor Bill Randolph from the University of New South Wales offers a slightly different perspective.
First, Randolph urges caution in respect of the data. Courtesy of difficulty for enumerators in accessing apartments (because of security measures), along with the significant portion of apartment dwellers who might be from migrant backgrounds and who may have encountered language or cultural barriers as far as Census completion is concerned, Randolph says it is possible that those living in apartments may be under-represented in the data. Furthermore, with a substantial number of detached houses being built across the country, it is possible that a more muted outcome on an aggregated basis might obscure a potentially stronger trend toward apartment living in the inner part of places such as Melbourne or Sydney.
Beyond data issues, Randolph says inner urban apartments may well cater for specific markets. Amongst the growing generation of renters and especially more youthful renters, he says there is often a preference for inner city or inner urban areas. Students and migrants from places such as south-east Asia, as well, are often well-suited to this type of living from a cultural perspective.
One concern, however, revolves around the volume of stock consisting of only one or two bedrooms. Whilst these may be adequate for professional couples with single children of young age, Randolph says they fail to cater for situations of multiple children each wanting their own space. At that time, he says it is imperative that these families also have alternative housing stock into which these families can relocate.
Furthermore, Randolph says many going forward may not want to live apartments but may in fact be forced to so where that is largely what is being built in their desired location.
“It goes back to the issue of whether it is a choice or constraint dilemma,” he said.
“If you are a twenty-eight-year-old, you are looking for somewhere to rent with your partner and all you have got is a two-bedroom flat or one-bedroom flat, that’s what you rent.”
“There is an issue with supply in that we know that the development industry wants to produce one and two-bedroom investor-grade products. That’s it’s business model.”
“The notion that we are demanding to live in one bedroom or two-bedroom flats overlooking Parramatta Road … – I don’t think so.”
“But if that’s what is on offer, that’s what people will live in.”
If preferences are not shifting toward apartments, they do appear to be shifting toward a more modest form of density – ‘semi-detached’ dwellings such as terrace housing or townhouses. Whereas numbers of those living in separate houses declined from 73.7 percent in 2011 Census to 71 percent in 2016, those living in ‘semi-detached’ housing increased from 9.9 percent to 12.8 percent over the same period.
Randolph welcomes that data, though he cautions again that it would need to be unpacked further prior to drawing firm conclusions. Should the data be able to be believed, he said it could herald a shift in preferences toward more modest type of medium density dwelling that is not afforded as much attention is potentially it should be.
Elliott also welcomes this but says developments of this type face considerable obstacles including planning constraints, high levels of taxation and local opposition
Mark McCrindle, a leading social and demographic researcher and head of foresting, strategy and research company McCrindle Pty Ltd, disagrees somewhat. Looking at Census data over the longer term, McCrindle says there is a clear shift away from detached housing and toward multi-residential forms of living, which he says is now embraced by almost half of the population in Sydney and one-third of the population in Melbourne.
In respect of flats and apartments specifically, McCrindle says that whilst the overall proportion of Australians who live in apartments has flatlined on a national scale, there is a strong push toward apartment living in major cities and particularly in Sydney, where the Census data shows that more than 28.1 percent of dwellings are now flats or apartments throughout the Greater Sydney region. In Melbourne, as well, the proportion is 14.7 percent.
“Talk of Australians not being in love with apartment living does not compute in Sydney because they (in Sydney) actually are in love with it (apartment living),” McCrindle said. “It’s the biggest thing after separate houses and it’s seeing massive growth.”
“But it’s a solution which is particular to Sydney and some of the other market capitals. It’s certainly not something that is going to ring true in a Bendigo or a Ballarat or an Albury Wodonga. It’s just not a solution that is going to work there to some extent.”
McCrindle said apartment living offered numerous benefits. As well as being less costly compared with a detached house within the same location, apartment living offered good amenity and walkable communities, closer proximity to social and employment opportunities and even the opportunity to save money on other expense items such as cars and outdoor maintenance. This, he says, is suitable for people during particular stages of their life. Many start families within apartments and then moving to townhouses or detached homes as families grow, he said. He says Sydney has done better compared with other cities such as Melbourne in delivering a variety of apartment stock which provides more options for families to expand.
Beyond apartments, McCrindle agrees that townhouses and the semi-detached housing options represent a critical area of growth. Without needing to go into large communities or live in large multi-storey complexes, he says townhouses still offer amenity, walkability, proximity to transport and employment opportunities whilst being larger than a unit or apartment and still delivering a price benefit compared with that of a detached house within the same locale.
“You can get those benefits of the densified living without having to move into a one or two-bedroom houses,” he said.
“You’ve got the smaller place, the cost advantage and an easy to maintain indoor/outdoor area. You’ve got the closer locale – they are smaller and they are built in the infill areas. It doesn’t mean you are living on level six in a larger development – it’s a smaller development. In a regional area where apartment living is not the main thing that people have experienced or as people move from a detached home to more densified living, a townhouse is an easier step.”
“Where we are seeing these developments take place (townhouses), they are in the infill. They are knocking down the inner-city homes in the regional cities and they are putting in the more densified medium density living.”
Recent years have seen a boom in inner-city apartment construction.
Whilst this may be popular with overseas speculators, however, living on the tenth floor still does not beat the quarter acre block for many ordinary Aussie families.