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Are we over-building?

Discussion in 'Property Market Economics' started by snowfree, 4th Nov, 2015.

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Are we over-building residential housing in Australia now?

  1. Yes

    58.8%
  2. No

    41.2%
  1. snowfree

    snowfree New Member

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    I just saw the news that "a record 229,438 new homes approved in the past year". Given the average household in Australia houses 2.5 person, and the population growth last year (to March 2015) is 316K, we only need 126,400 to sustain the housing. I understand that there are replacement needs for some properties, but that shouldn't be a huge number.

    So the question is: are we over-building? During the middle of last decade, the US housing boom (and the bust) was partially driven by the "spec developers" who speculated the house price growth, and overbuild beyond the long term average of new housing supply.

    Are we in the same situation?
     
  2. hammer

    hammer Well-Known Member

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    Depends....
    Some parts of the country yes, other parts no. Also the stats say "dwellings" which can be misleading. Most cities are heading towards a major glut of high rise apartments. But detached houses are either about right or becoming scarcer....
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    More a question of are we building the right mix of housing stock?
     
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  4. sash

    sash Well-Known Member

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    Spot on.....detached hosues with all the mod cons are becoming rarer...apartments are dime a dozen.

    Yep....more detached houses with small backyards are products which most people need. Though most say they want a house 4x2x2 on 550 sqm block. Needs and wants are different. :D

    My gut feel is fast forward another 10 years...the 3x2x2 on 250-350sqm will become gold. Just look at the demographics...that says it all. More single people, single parent families, retirees, couples, and 1 child families....that all points to smaller easy to manage smaller homes.
     
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  5. wogitalia

    wogitalia Well-Known Member

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    Perth is actually doing a great job right now of building inner city apartment buildings, they're overpriced as all hell, but at least we're building them and hopefully if there is a slight oversupply they will come back to a more reasonable price.

    We have an entire generation that is being rapidly priced out of the market and forced to make the very tough decision of either not owing their own place or not living their life to own a place. People living 30km+ from the city just so they can "live the Australian Dream" is ridiculous, people, especially the elderly and young, should be able to live within a few km of the city and apartments allow that to happen by sacrificing a backyard (most apartments these days have common areas better than a modern backyard anyway). Not to mention the unbelievable drain that trying to build infrastructure for these places is becoming.

    The problem in Perth is that without getting rid of all local parks and community areas or forcing people to subdivide their large blocks we have no land worth building any housing stock on. It's vertical or nothing except for the very select few who want to live in what are essentially remote communities and lets just say they've got plenty of stock out there already!

    From my understanding this sprawl is not unique to Perth though my experience in Melbourne and Brisbane is that they are both a good 5 or so years ahead of us in this stage of development (like everything else!) I assume it's more like 10 years in Sydney!

    I think an oversupply is almost needed because realistically a fall in property prices is more likely than a rise in wages and one of those two needs to happen to correct the current unsustainable disconnect between the two.
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    @sash - you've hit the nail on the head 3x2x2 on small blocks. Going one step further, torrens title not town house
     
  7. willair

    willair Well-Known Member Premium Member

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    I don't think so,not on the scale of the US market different lending legal walkaway rules in the US,but in the small area we invest in in Brisbane you dont have to walk too far to see various areas with over 5 high rise multi level unit blocks going up very quickly,so that one side massive units developments,if there is a over supply and the market tell itself that's when they stop selling,and i don't think that's happening in Brisbane,still sold signs everywhere...imho..
     
  8. sash

    sash Well-Known Member

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    Yes...that is exactly the product I am building..with the lot meaning stone benchtops, cooling, downlights, back landing or alfresco (depending on state), 900m appliances in the kitchen, overhead to kitchen, storage (perferably linen, laundry storage, storage nook in garage), smart landscaping for easy maintenance, walking distance of a park, security doors, homes design with aspect of house in mind, window locks, data/media cabling for NBN, near shops and cafes.

    Most of these houses are 17-20 sq...so plenty of room for most people and a great alternative to T/H or units.

    A lock and leave solution just like a T/H but no strata fees.
     
  9. AndrewTDP

    AndrewTDP Urban Planning Consultant Business Member

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    Yep, a lot of what we are doing at the moment is this as well.

    The new Standard Instrument LEP at least actually allows this option (if Council has gone for that clause).

    It's a great producct - and actually a move back to the type of housing that people consistently have a demand more - the old terraces close to services, shops etc.

    It's a form of medium density development that well and truly works.

    Hope you're doing 2.7m ceiling heights as well in the living areas.
     
  10. D.T.

    D.T. Adelaide Property Manager Business Member

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    Voted yes. In my mind, if they built employment hubs in outer areas they wouldn't need to push the density of inner city so high. Look at the way both Canberra and Texan cities are laid out for example.
     
  11. sash

    sash Well-Known Member

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    Hi Andrew

    Yes...correct the bigger developers are also building amenities..I target estates which have parks allocated, shops/amenities (Kmart, Target, Woolies, Coles, Aldis) within 2 klms, and good design guidelines.

    Yes and excellent medium density product...Melbourne and Perth are probably the most advanced on this sort of product. ...it has really taken off.

    My ceilings are raised from 2440mm to 2590 thoughout the house...so about 110mm short of 2.7m. ;) Much better for light and feeling of space. Also using lighter colors in the living area also makes it look much bigger.

    Also have put in bigger doors for the feeling of space....just little tricking up does wonders.
     
    Last edited: 4th Nov, 2015
  12. AndrewTDP

    AndrewTDP Urban Planning Consultant Business Member

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    Have you done any at The Ponds? We do some of the design review stuff there...

    I'm a huge fan of that product. It's where residential development should be heading and is a great middle ground. Not everyone wants an apartment - and we can't just continue to build more suburban sprawl.

    We've started doing 2,7m in our townhouse designs because that gives a great result - particularly with no side windows. I can see had 2.6ish can work if you have a detached property. 2.4m is fine for bedrooms, but just creates really unfriendly living spaces.
     
  13. Biz

    Biz Well-Known Member

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    I live out in the burbs of south west Sydney. People don't want smaller blocks. We're being force fed 350m2 blocks by developers because that is where the profit is for them. The big players are all in kahoots with the councils who also want higher density to fit everyone in.

    Before anyone says we want smaller blocks houses because they are easier to maintain. No, that is bollocks. It takes no more to maintain a 600m2 block compared to a 350m2. It's just all about dollars and cents for councils and developers.
     
  14. sash

    sash Well-Known Member

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    No have none in the Ponds...at this point the cycle...I would not dare to enter it.

    100% agree with you about the product...very functional for the modern lifestyle.

    I feel even 2.44 in the brms makes it look small. I also...put eaves on the front otherwise the house looks cheap. Depending the statement it will be harder to put eaves on the side and back due to set-back requirements.

    Agree about urban sprawl...infilling in places would be great...but too many NIMBYs still stuck to their 1500 sqm block..in particular the upper North Shore. Time for these people to move with the times. Also these houses come with a minimum of a 6 start energy rating..now if only they made solar panels (quite cheap) compulsory going forward with govt subsidy and go to 7 star energy rating we could also address the greenhouse affect at the same time.

     
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  15. sash

    sash Well-Known Member

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    No where I am sitting in the high demand of Melbourne these blocks are sold prior to listing via a VIP database. They usually have a 9-12 mth wait to title...and get this these are also the blocks nearest or face parks.
     
  16. AndrewTDP

    AndrewTDP Urban Planning Consultant Business Member

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    Anecdata is not evidence.

    There is much more to the market than what you see in your immediate local area.

    Some people want sprawling suburbia. They are currently catered for. But it is not a sustainable development model.

    Some people want to be in medium density development and not have to rely on cars to get everywhere and be closer to services. This used to be well catered for (I'm in a very well established inner city suburb with 200sqm blocks being the biggest you will generally find) and demand for houses in this, and similar areas, are very, very, very high. This housing type dropped off around 30 years ago but is now coming back.

    Some people want to live in high density apartments right smack bang in the action. Heaps of new apartments being built.

    Some people want to live in a rural environment.

    Me? No kids, no time to mow the lawn, work from home a bit. I want a 2-3 bedroom house, attached, detached, semi, not fussed, in a convenient location where I can walk instead of having to rely on a car, a small yard with a focus on outdoor entertainment space. And a lot of people in my age bracket want the same thing.

    This was not previously a option that was readily explored, because the assumption was that everyone wants a 5 bedroom plus media room plus formal and informal living rooms plus three car garage sprawling McMansion.

    Strategic planning is about providing for all these different options. And actually planning for and providing for this future growth. To go off on a every is corrupt because they don't like exactly what I like is really not helping matters.
     
  17. Biz

    Biz Well-Known Member

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    Because that is what is available and cheap. Australand, Bovis etc are not falling over themselves to release larger blocks. The big guys get away with it so the smaller developers do as well.
     
  18. AndrewTDP

    AndrewTDP Urban Planning Consultant Business Member

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    Sound good - I really like the sound of what you are doing.

    I'd be keen to sit down and compare plans and approach at some stage.

    Australia has the largest size of any country when it comes to new builds. It's not sustainable. We can't have growth and not modify how we approach development. And having a sprawl or high rise mentality is not really helping anything.
     
  19. Biz

    Biz Well-Known Member

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    Yes, it is horses for courses. I understand not everyone wants a 1/4 acre block. What I am getting at though is out here there are few other options. 95% of the blocks are less than 450m2. People don't want this but it is profitable for the developers so it is what they do.
     
  20. AndrewTDP

    AndrewTDP Urban Planning Consultant Business Member

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    If people didn't want it, they wouldn't buy it.

    If people didn't buy it, they would have to be heavily discounted.

    If they are heavily discounted then there is less profit.

    If there is less profit, they would simply continue to do 450sqm blocks.