Bigger, more costly homes defy trends with household sizes, affordability

A curious feature of residential real estate is the way we keep building bigger and more costly dwellings, in defiance of trends with household sizes and concerns about affordability.

ABS data shows that the market-share of dwellings containing four bedrooms or more increased by 1.9 percentage points between the 2011 and 2016 Censuses, while three-bedroom dwellings fell by 2.4 percentage points.

Homes with four or more bedrooms represent 32% of total dwellings, up from 30% in 2011. Those with three bedrooms or fewer still predominate, but have fallen from 68% to 66% of the total.

Some three-bedroom houses are disappearing as older places are knocked down and replaced with new high-rise developments.

Yet the typical Australian family - a couple with two kids - remains largely unchanged, while the number of lone-person households has increased from 22.9% of the total in 2001 to 24.4% in 2016.

These numbers hardly suggest a need for an increase of the number of big homes with additional bedrooms. But there are other possible explanations for the rise in the number of four- and five-bedroom dwellings.

Blended families, where children from previous marriages live with step-siblings from a newer relationship, are becoming more common. A spare bedroom may be reserved for visits by step-siblings or children in a custody arrangement.

Another reason is more people are working from home, necessitating a home office. About 1.3 million people say they work from home to enjoy a better work–life balance. 

Inter-generational households are common with immigrants, who provide the bulk of Australia’s population growth, especially in Melbourne and Sydney.

Indian and Asian immigrants in particular may have three generations living in one household: grandparents, parents and kids – and the Census shows that, increasingly, migrants to Australia are coming from these sources.

One of the Census findings was that the number of single-family households has decreased from 75% in 1991 to 69% in 2016 – while group households have increased from 3.7% of households in 2011 to 4.3% in 2016. We may see more of this trend if our migrant patterns remain the same.

Louise Lucas of The Property Education Co. suggests all may not be as it seems with four-bedroom houses.  The “McMansions” that are being produced by developers are not necessarily larger, but they are promoted as having four bedrooms although the fourth bedroom is likely to be much smaller than the others and only be useful as a study, she says.

But, one way or the other, the trend towards larger homes for a multitude of reasons is continuing.

Brisbane analyst Michael Matusik suggests we need to rethink the style of the stand-alone houses we’re producing and make allowances for more than one generation, including elements such as home offices, flexible spaces, smarter storage and energy efficiency.  

Terry Ryder is the founder of hotspotting.com.au. You can email him or follow him on Twitter.