If Australians are really going to become apartment dwellers, developers need to start building more large apartments for families.
Developers need to start building more large apartments before Australians will become truly comfortable with the notion of apartment living.
Cameron Kusher, Head of Research at CoreLogic, says the latest surge in apartment construction was initially targeted at foreign buyers and investors.
"I think initially it (apartment construction) was investor led and demand was from offshore, where buyers are used to small living spaces. But if more people are going to be living long term in apartments there needs to be more types of apartments," he said.
Data from CoreLogic shows that around 50% of apartments sold in the year to June 2016 were two bedrooms. The trend is fairly consistent across all capital cities, apart from Hobart, where 62.7% of all apartments sold had two bedrooms. In Sydney, 55.8% of all apartments sold had two bedrooms. In Melbourne, the rate was 51.6%.
About half as many three and four bedroom apartment were sold during the year to June 2016. In Sydney, 28.2% of all apartments sold had three or four bedrooms. In Melbourne, the figure was 33%. In Brisbane, 45.1%, or nearly half of all apartments had three or four bedrooms.
Percentage of apartment sales with one, two, three and four bedrooms
Source: CoreLogic.
In the year to July 2016, 17,380 dwellings were approved for construction, according to CoreLogic. A total of 10,898 apartments were approved (63% of total approvals), and 6,482 houses (37% of total approvals).
In Sydney, there were 54,667 dwelling approvals over the past year, including 16,360 house approvals (29% of total approvals) and 38,307 unit approvals (70% of total approvals).
In Melbourne, in the year to July 2016 there were 57,428 dwellings approved, including 25,880 houses (45% of total approvals) and 31,548 units (55% of total approvals).
If you looked at the apartment sales and dwelling approval numbers in isolation, you would not realise that family households are the largest household type in Australia. The ABS recorded 6 million family households in Australian in 2011. Though single person households are the fastest growing type of household, there were still only 2 million single-person households in Australia in 2011.
Kusher says most three or four-bedroom apartments currently being built are at the top of the building and designed as 'luxury penthouses', and are very expensive. He said if sales of one and two-bedroom apartments begins to slow, developers will begin to look to ways to make construction of larger apartments cheaper. "What it's going to take is developers making it cheaper to build larger apartments," said Kusher, "and not positioning them at the top of the building."
While foreign buyers and investors continue to buy one and two-bedroom apartments that are flooding onto the market, developer construction patterns are unlikely to change. But should demand for these smaller format apartments dry up, developers could begin to broaden their target market to include families.
Kusher said he has observed signs this shift could already be underway. "I do think, from what I've been seeing, that some developers are looking at building larger apartments, especially in Melbourne and Brisbane," he said.
Global cities with high rates of apartment living, such as New York, Singapore and Barcelona, all have an abundance of family-sized apartments.
Until more family-sized apartment are available, Australia will never truly became a nation of apartment dwellers.
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Australian cities need more large apartments for families