Housing stock not giving people what they want: Report

New housing construction in Sydney is moving in the right direction in meeting buyer desire, albeit very slowly. But Melbourne’s new housing simply mirrors its current stock mix and not current demand, according to research by the Grattan Institute.

Both capital cities have a clear mismatch between the current housing stock and the mix of housing that home buyers say they would choose, according to the Grattan report, The Housing We’d Choose, which surveyed 700 residents from Melbourne and Sydney.

It noted residents wanted more apartment-style housing but that the housing stock in the two capitals was dominated by detached houses.

In 1976, the share of detached housing was 78%, while in 2006 this was at 74%, according to the report’s author, Jane-Frances Kelly.

Some 7.4% of all Sydney’s households say that, given current prices and their budget, they would choose a semi-detached house in Sydney’s municipalities, including Sutherland Shire, Bankstown, Liverpool, Warringah, Fairfield and Auburn.

However only 2.8% of the total housing stock is made up of semi-detached dwellings in the area.

“This leaves 4.6% of Sydney’s households, or about 70,000 households, whose preferred trade-offs can’t be accommodated,” the report notes.

The report notes many factors have triggered the mismatch between a city’s housing stock and the trade-offs residents say they would choose at a given point in time.

While noting Australians are highly mobile, the report says that the apparent mobility is driven largely by renters and younger Australians.

“Owner-occupiers are much less likely to move,” the report says.

“Indeed the difference in mobility between owners and renters in Australia is the highest in the OECD.

“People stay in the same house for a long time Relatively few houses are available at any one time, which combined with time constraints and search costs, leads movers to choose a second-best option.”

The main barrier cited by survey participants who had not recently moved and were not happy with their current homes was “the hassle and cost of finding and moving into a new house is prohibitive,” the report says.

The second most commonly cited barrier was that it would not make financial sense due to government charges.

Research has found that Australia has one of the highest transaction costs of moving house in the OECD.

The number of bedrooms was listed as the most important factor in housing choice, according to the report.

“Unsurprisingly in choosing dwellings, people give priority to the number of bedrooms, having a detached house with a garage, and ample living space.

“In short, bigger is better,” Kelly says.

In terms of location, respondents said they preferred to live in a safe neighbourhood, close to family, friends, shopping and public transport.

“Notably, closeness to work did not rank highly,” Kelly says.

Given real-world budget constraints, there is inevitably tension in satisfying preferences for both, she says.