Large apartments are a solution to Australia's housing crisis

Australia Broadcast Center

6 hours ago

They are becoming more sought-after, yet three-bedroom apartments remain the golden unicorn of Australia's housing market.
Experts say larger apartments could help solve the housing crisis, and are urging government and policy makers to incentivise their construction, or risk facing the consequences for years to come.
Richard Temlett, national executive director of property advisors Charter Keck Cramer, warned the crisis would get worse unless we re-evaluated what the great Australian dream meant and diversified our living options.
Mr Temlett advises developers and various levels of government on housing policy and said demand for three-bedroom apartments was growing.
"The apartment market is emerging as more people realise the great Australian dream [of owning a freestanding house] is out of reach," Mr Temlett said.
He noted in Sydney, for example, some families were choosing apartment living to remain in school zones, or opting for location over a longer commute.
Yet the reality was fewer larger apartments were available.
Rapid increases in building costs and inflexible planning regulations were not helping the situation, he said, making him concerned for future generations.
"Where are our kids and grandchildren going to live?" he said.
"We need more housing and different types, and buyers and renters need more choice."
Charter Keck Cramer associate director Ben Carter said data from the Australian Bureau of Statistics showed demand for apartment living increased across all age groups between 2006 and 2021. With those between 20 and 24 recording the largest uptake, followed by those in the 25 to 29 bracket.
Figures from the 2021 Census show Sydney has the highest number of three-bedroom apartments, with 64,340 out of a total of 487,666 apartments.
In comparison, Melbourne has 17,157 three-bedroom apartments, out of a total of 204,442 apartments.
However, Mr Carter said he had observed a greater representation of three-bedrooms in recent projects as developers began to orient more towards the market.
Matthew Kandelaars from the Property Council of Australia said as apartment living became more popular so did the need for more spacious designs, with buyers demanding more diversity of stock.
"Apartment project feasibility has been pushed to its limits, and this is particularly evident for larger apartments," he said.
"Planning delays and the associated costs, low worksite productivity and apartment-killing state taxes are stifling supply."
The scarcity of large apartments is something Melbourne woman Sarah knows well.
Sarah, who didn't want her full name published, gave up on the idea of living in a house when she first started looking to buy in Melbourne.
She had dreamed of a house her family of four could grow into: three bedrooms, light-filled, a small garden. But she soon realised this was beyond their budget if they wanted to live in the inner city.
So, the family settled on a two-bedroom 1970s brick apartment in Collingwood.
Avoiding a long commute was their top priority. Sarah didn't drive, so public transport and bike paths needed to be a realistic way of getting around.
Their commute time was under 10 minutes, and the family spent a lot of time outdoors.
"Those were the really big benefits," she said. "Not having a large space to clean was another advantage."
But seven years later, they sold their apartment and could afford to buy a small three-bedroom house in a neighbouring suburb.
"As the kids got bigger, and especially during the [COVID] lockdowns … it just felt like [they] were on top of each other and needing a little bit more physical space," she said.
Sarah would have been happy to continue living in an apartment, but couldn't find an appropriate three-bedroom one within their budget.
"Unfortunately, there's not a lot of decent family sized apartments," she said. "A few of the three-bedroom ones we looked at had a big master bedroom and two s*** rooms with no natural light."
Her family is not alone in wanting to prioritise location over space.
Infrastructure Victoria's 2023 report Our Home Choices found 20 per cent of people surveyed would trade a detached home in a new suburb for a townhouse or apartment closer to a city centre if it was available at a comparable price. But 25 per cent of people surveyed said they would choose a detached house in one of Melbourne's growth areas if they had to move.
Adam Haddow, president of the Australian Institute of Architects and director of SJB Sydney, said there hadn't been much of a market for family apartments but that was changing.
"The only way the market gets there is if there is some incentive to get the market into that position," he said. "And now I would say the metro in Sydney has been something that will change that market."
He said he was seeing clients asking for four-bedroom apartments.
"That is a crazy thing, if you had asked me that two years ago," he said. "The fact there is demand from families to move into apartments is amazing."
He said the challenge now was to deliver affordable family apartments, not only apartments for wealthy families.
"But it needs some push and that push has got to come from something like a reduction in mortgage rates to encourage people, which would then encourage developers to show that there is actually a market there."
Australian Housing and Urban Research Institute managing director Michael Fotheringham agreed the notion of owning property in Australia was changing.
But Dr Fotheringham said governments and developers still weren't getting the memo to build up instead of out.
"Nationally for every six freestanding houses there is one apartment," he said.
"Tastes have shifted and there is a lag effect and developers have not always anticipated that shift."
Dr Fotheringham suggested further tax exemptions and better cost initiatives for buyers and developers could help incentivise the building of larger apartments.
According to Toby Dean, executive director of not-for-profit Nightingale Housing, Australia had only recently begun to recognise that apartments could be great places to live and raise a family.
"They're typically located close to public transport, shops, school, work and importantly, existing support networks," he said.
"We advocate for the wider adoption of compact studio and one-bedroom homes in both regional and urban areas, alongside three-bedroom apartments in cities that can accommodate families, intergenerational living, or tenants-in-common arrangements."
The cost of constructing multi-residential housing had risen significantly in recent years, making the cost per square meter less competitive compared to existing homes, townhouses, or freestanding homes, he said.
"Our three-bedroom apartments are typically around 100m² with their size reflected in the pricing," he said. "While these homes may appear risky to some developers, we remain hopeful that perceptions will shift over time."