Australia’s Housing Crisis: Experts Weigh in on the Potential of Downsizing and Household Reconfigurations
Australia’s growing population continues to face a pressing housing shortage, but experts suggest that a shift in household configurations could significantly ease this crisis without the immediate need to build more homes. Sue Williams, in her article, explores this underutilized solution, drawing insights from various industry professionals.
KPMG demographer Terry Rawnsley suggests a hypothetical scenario where the number of homes and people could be optimally rearranged to meet housing needs more efficiently. “In an ideal world, you could just pick up the number of homes and people and shake it around and end up with an amount of housing more appropriate for everyone,” he said. However, he acknowledges the complexities of the real estate market, which doesn’t allow for such straightforward solutions. “Market conditions will have a slower impact… But the only real answer now is to build more homes at the right price point and in the right places,” Rawnsley adds, highlighting the deep-seated issues of affordability and availability.
The conversation around household sizes was reignited by Reserve Bank assistant governor Sarah Hunter, who pointed out the significant difference a return to the household sizes of 40 years ago could make. “If we had as many people per household as 40 years ago, we would need 1.2 million fewer dwellings,” Hunter stated at the Centennial Congress of the Real Estate Institute of Australia. This number matches the federal government’s housing construction target over the next five years, underscoring the potential impact of increased household sizes on housing availability.
Professor Peter Phibbs of the University of Sydney notes that lifestyle changes, particularly the rise in working from home, have also contributed to the current housing pressures. “A lot of people had a bit more money with the government subsidies in COVID, so moved out of share houses and lived alone and found they liked it. Affordability might push some of those back,” he explains.
Despite these insights, independent economist Harley Dale cautions against expecting quick fixes from encouraging downsizing alone. “It’s one thing to recognise the rise in all this empty space, but it’s another thing to try to make it available for other people to use,” Dale comments. He also touches on the emotional and financial complexities that deter older homeowners from downsizing, despite potential tax incentives.
As the debate continues, the 2021 census sheds light on another dimension of the issue: there are at least 3.5 million spare bedrooms in Australia, often in homes resistant to downsizing due to their multifunctional use by residents.
With the government and experts exploring various strategies, including increased rental supply and construction incentives, it’s clear that resolving Australia’s housing crisis will require a multifaceted approach. As interest rates and construction costs play a crucial role in shaping market conditions, only time will reveal the effectiveness of these proposed solutions.
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