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The Boomer housing bust: coming to Australia?

They’re calling it the great “senior sell off” and it’s scaring suburban America. Still recovering from the housing market crisis of 2007-09, America’s latest concern is a looming glut of unsellable suburban…

A respected US researcher believes baby boomers retreating from their large homes could lead to a glut of unsellable homes. Could this happen in Australia?

They’re calling it the great “senior sell off” and it’s scaring suburban America. Still recovering from the housing market crisis of 2007-09, America’s latest concern is a looming glut of unsellable suburban homes as ageing baby boomers seek to downsize.

Respected demographer Arthur C. Nelson, Director of the Metropolitan Research Centre, University of Utah, has analysed data from the American Housing Survey, finding that over the past 30 years, 80% of new homes built in the US were detached single family dwellings. Much of this new construction was of the McMansion variety, exceeding 230 square metres in size, as the post war baby boomers (born in between 1946-1968) raised their families.

But as America’s baby boomers start to turn 65, many are getting ready to sell their empty nest, often seeking apartments or townhouses in rapidly gentrifying inner city areas near services and public transport, and in popular sunbelt destinations. The worry is that the number of people in their peak buying years coming along behind them, are estimated to be around a quarter of that in previous generations. Like boomers, new generations of American buyers want smaller, more accessible homes, and they are also are more likely to rent. The mass market for McMansions has shrunk.

Professor Nelson expects America’s next housing crash to hit when isolated seniors in auto dependent suburbs find ageing in place untenable. He predicts that between 1.5 -2 million baby boomer homes will hit the market each year from 2020 on. Those who can’t sell may simply abandon the family home.

Could this happen in Australia?

Changing housing careers

In many ways Australia’s social trends have echoed those of the US. Our own baby boomers are advancing towards retirement, with the proportion of over 65s nearly trebling from 8.8% in 1971 to around 21% by 2026 and 28% by 2056.

Our life cycles and housing careers have changed too. For most of the 20th century, the expected pathway was for young adults to leave the family home, rent in the transition years before marriage, buy a starter home before upgrading to a second or third home along with children and growing household wealth. Outright home ownership underpinned financial security in retirement, while renting was viewed very much as a transitional tenure.

However, as in the US, social changes, along with affordability pressures, have seen adult children staying home longer, and purchasing homes later. Many low and moderate income earners are unable to achieve home ownership at all, particularly in the major cities. More seniors are reaching retirement with substantial mortgages, or in long-term rental having fallen out of home ownership following a personal crisis such as divorce.

These changes reflect fundamental demographic shifts, with lone person households and couples without children the fastest growing household types. Our cultural make-up is also becoming more diverse, with unpredictable implications for household formations and dwelling preferences in the future.

Changing suburbia?

Like America, nearly 80% of Australia’s housing is detached.

But where Australia differs from the US is in the scale and nature of suburbia. In the US, cheap loans and other government incentives encouraged home buyers to favour new homes in the suburbs, rather than renovate existing city dwellings. Combined with an exuberant program of highway development, liberal land release policies, and a vigorous construction industry, America’s suburbs flourished in the post war decades. At the same time, disinvestment and a hollowing out of inner city areas combined with racial tensions to feed a process of “white flight” to the suburbs.

Stringent development codes for these new suburbs – large minimum lot sizes, prescriptive dwelling design specifications and zoning prohibitions against units and townhouses – created a virtual drawbridge – literally designing out diversity.

By contrast, Australian planning policies governing suburban release have always been linked to population forecasts and household trends, informed by the demographic and economic fundamentals that drive housing demand, preventing large scale over supply of dwelling lots, and avoiding “leap frog” development out of sequence with planned urban expansion.

Australian planners – though much maligned – also acted early to overcome local barriers to diverse housing types. For instance, NSW planning policy in the 1980s ensured that homes for seniors could be developed in residential areas, providing housing options for downsizers within existing neighbourhoods.

Preserving housing value

If Australia’s middle and outer suburbs – made up of traditional detached suburban homes – haven’t fared as well as the favoured inner ring in terms of real estate values over the past 30 years, we’ve certainly escaped the housing market failures that have blighted whole communities in many cities of the US.

Preserving this fundamental market stability is important, and will require careful urban policy in the future.

The real lesson from the US is that homogeneous, inflexible, and prolific housing development – the “build it and they’ll buy it” model – represents long term risks, and can be difficult to turn around when demand changes.

For us that means we need to continue to carefully evaluate the locations and scale of new housing. Particular risks are likely in coastal retirement destinations beyond the capital cities, many of which have seen increased numbers of detached suburban developments as retirees cash out their city properties for a dream home near the sea. But without accessible health facilities and services, or diverse and sustainable employment growth, these housing markets will struggle once the sea changers require higher levels of care, and commence a process of return migration to the major population centres.

In contrast to America’s surplus McMansions, another future weak spot in Australia may be poor quality high rise apartments in marginal outer locations. An ageing vertical suburbia may prove difficult to renew or adapt to unpredictable future shifts, once the current trend towards older, smaller household stabilises.

Our humble terrace has proved remarkably resilient and adaptable over more than a century, representing a highly desirable housing form as the backbone of the dense, walkable neighbourhoods home buyers increasingly demand. New generation terraces and innovative medium density housing offer longer term flexibility – and are generally compatible with existing suburban typologies.

As boomers age we can breathe new life into older suburbs by encouraging more conversion of existing stock – splitting homes in two. This can provide short term help for stay at home kids, and might also provide carer accommodation in future. Helping boomers adapt their homes to changing life cycles will mean less stock hitting the market at the one time, hence less downward pressure on prices.

NSW has led the way by permitting granny flats in residential zones, providing a potential income stream for retirees, while contributing to more diverse rental options in established suburbs.

Reinvesting in the suburbs

Professor Nelson urges Americans to renew and retrofit their ageing suburbs, rather than continuing 20th century urban sprawl, in part to protect existing home owners from further foreclosure crises.

While Australia’s current preoccupation is a perceived national under-supply of new homes, the real challenge is to unlock existing housing opportunities within our own ageing middle and outer ring locations. That means sustained policy support to transition existing lower value areas – at risk of further market decline – to the opportunity sites for future growth.

Your housing equity may depend on it.

Join the conversation

69 Comments sorted by

  1. Trevor McGrath

    uneducated twit

    Hi Professor. I can say that you are dead right. True story, my 71 year old mother announced this week that she was selling her house and moving into the new fully integrated aged care facility (which is not even finished yet) in the next suburb. She is going to buy one of the 3 bedroom apartments (so us kids can have somewhere to stay when we come to Brisbane) but the facility will offer care all the way up to dementia and palliative care units . The new one stop shop for growing old disgracefully. Cheers

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  2. Kevin Cox
    Kevin Cox is a Friend of The Conversation.

    logged in via LinkedIn

    A good article.

    Another option to retrofit our existing suburbs is to install more fixed public transport. Buses are not permanent enough for public transport. We want services that are difficult to remove once they are installed so that people have confidence that the services will be there in 20 or 30 years. This means rail or perhaps guided motorways with a fixed installation in the roadway. An attraction of high density is not high density but it is easy access to services without using a motor car which becomes problematic with increasing age.

    MacMansions are pleasant to occupy. Having lots of space in which to live is great. The disadvantage of having to look after the space can be overcome with modern cleaning and materials technologies. Putting in better fixed public transport can help overcome the access to services issue.

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    1. Tim N

      Semi-retired Landscape Architect

      In reply to Kevin Cox

      Easy. But how do we fund this? And how well used is PT going to be running through low density? From examples in Perth, and Melbourne somewhat, this still requires the use of a car and massive carparks to get too and from the the fixed PT. Australia's suburbs are car-dependant, if we want to move away from car dependancy it requires much more than just more public transport provision. For a start we will need to actively discourage car use whilst simultaneously providing and promoting an alternative. The suburb as a typology is grossly inadequate for decreasing car use, what we need is more housing diversity and flexibility.

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    2. Andrew Smith

      Education Consultant at Australian & International Education Centre

      In reply to Tim N

      Like has happened in recent past, if AUD floats down, and price of petrol steadily increases or worse, spikes....... more people will choose PT, and may well demand more investment in PT......vs more roads and cheap petrol.

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    3. Jack Arnold

      Director

      In reply to Kevin Cox

      Hi Kevin, an interesting comment to a thought provoking article.

      I am reminded that once there was an electric tram line through Sydney's Paddington, one of the first purpose built high density suburbs in Australia. Indeed, Sydney had about 2,200 MILES of tramway network in about 1950.

      Then, in the 60s, allegedly due to pressure from vehicle manufacturing interests, a government study found that trams were exactly twice as costly to operate as buses. Naturally the cost of road maintenance…

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    4. Kevin Cox
      Kevin Cox is a Friend of The Conversation.

      logged in via LinkedIn

      In reply to Jack Arnold

      Jack,

      Fixed installations are more permanent than bus routes and if there are many people who have built their transport around the routes then it is going to be much harder to repeat the mistakes of yesteryear.

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    5. Kevin Cox
      Kevin Cox is a Friend of The Conversation.

      logged in via LinkedIn

      In reply to Tim N

      Tim,

      You fund fixed installations from the increase in the rent on property around rail stations. The rent of an office or shop or dwelling increases by 20% if it is near a station. You distribute people from stations with feeder buses or fixed installation pod systems.

      The fixed installations will bring more diversity of dwellings as people will build higher densities around the stations to take advantage of the higher rent.

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    6. Jack Arnold

      Director

      In reply to Kevin Cox

      Thank you for the prompt reply Kevin. Uhm ... Paddington was a 400 lot residential subdivision specifically designed for "high density" living of the time. Every corner was a small shop, trams were not more than two blocks away. Later generations by government policy ripped up the tramlines.

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    7. Jack Arnold

      Director

      In reply to Kevin Cox

      A small problem Kevin ... rents are "owned" by landlords not governments, so how do you get landlords to fund your model without increasing rents to cover the cost, thus passing on costs in the best/worst capitalist tradition?

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    8. Iain Wicking

      Director

      In reply to Kevin Cox

      You could also use a land tax which would rise as property values rise along a proposed new transport corridor. Currently investors and property owners free ride public infrastructure benefits that run through their suburbs as investment comes from general taxation. The rise in tax could help underpin localised infrastructure investments.

      The whole housing bubble is going to collapse in on itself. It is inevitable as asset values will continue to deleverage globally. What we are experiencing now is merely a pause in this global process - we will become asset poor while living costs will continue to rise over time.

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    9. Kevin Cox
      Kevin Cox is a Friend of The Conversation.

      logged in via LinkedIn

      In reply to Jack Arnold

      Jack,

      Yes the rents increase. That is what happens when a property becomes more desirable. I am suggesting that the most of the increase that is created by the proximity to the station be collected through rates and taxes and used to fund the building of the fixed installations.

      If you look closely you will find that the Capital to build the HongKong Rail System is funded from the real estate above the stations and not from the fares collected. You don't sell the real estate. What you do is to fund the repayments of the Capital used to build the fixed installations from the income stream from the rates and taxes on rent.

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    10. Chris O'Neill

      Victim of Tony Abbotts Great Big New Tax

      In reply to Kevin Cox

      "You fund fixed installations from the increase in the rent on property around rail stations."

      And how does the government get its hands on some of this? And what about property that is owner-occupied and thus not rented? The only rational solution is tax on either the increase in land value or an annual tax on the land value. blog.lvrg.org.au

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    11. Stephen Ralph

      carer

      In reply to Iain Wicking

      land tax already exists in all states,
      plus there is a development levee/tax in victoria paid by developers, but probably passed onto home buyers.

      care needs to be taken with increases or variations on land tax...

      if you bought a holiday house in lorne (vic) 40-50 years ago and it is still in the original owner' s name (as in many cases), land tax could be as high as $20K p.a. in some cases.

      many people are asset rich and cash poor in terms of land and home values.

      if you rent out a property in toorak (vic), or where the property is owned by a trust, and where the land value is $2 million - ltx = $12k, p.a if the land value is $4 million, ltx = $47K p.pa

      years ago many lawyers advised buyers to put property into trusts and that decisionhas come back to bite many people - some severely.

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    12. Kevin Cox
      Kevin Cox is a Friend of The Conversation.

      logged in via LinkedIn

      In reply to Jack Arnold

      Jack of course they pass on the costs and of course they will keep some of the increase in the best capitalist tradition. I am a committed capitalist and believe most of the income for most people should come from their investments either individually or through other group organisations like companies.

      It is not too hard to devise a tax where the landlords get some of the extra value and the community gets the rest. I am not arguing the particular method of "harvesting" the tax (although I have some ideas on how it can be done:)

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  3. Arthur James Egleton Robey

    Industrial Electrician

    To what purpose?
    Is the object of the exercise to ensure that house prices never come down so that one has to become a Debt Slave for life in order to find shelter?

    Russia and South Korea do not have a housing shortage.
    They are community minded and ensure that Maslows hierarchy of needs is met for their citizens before considering the needs of Capitalism.

    We must abandon the American model as they have abandoned their Ideals.
    I will not own a house and mortgage on moral grounds.

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    1. Shaun King

      Designer

      In reply to Arthur James Egleton Robey

      Yes Arthur, that is the object of the exercise. Debt Slaves for life just for the right to have a roof over ones head. How'd we ever get conned into this game? Time to unravel the mess and put things right way up.

      The majority of the population are still under the spell of "banks" own all our houses. Slowly we're waking up to the fact that they don't, but like all good things, it takes time.

      I'm optimistic this nonsense will be exposed for what it is, and we'll all eventually have our own space to raise our families, without lining the pockets of banks and govt.

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  4. Paul Burton

    Professor of Urban Management and Planning at Griffith University

    Good points and well made Nicole. As someone who lived in terraced housing for most of my adult life I can attest to its suitability for many different types of household. The challenge in Australia, or at least up here in Queensland, is to design contemporary versions that suit the climate and the need for good acoustic insulation.
    I also believe there is a market opportunity to specialise in converting Australian MacMansions into dwellings capable of housing multiple households in a decent manner. Of course us planners would also need to manage the political flak that would almost certainly be associated with the wilful creation of houses in multiple occupation, but we ought to be up to the task.

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    1. Felix MacNeill

      Environmental Manager

      In reply to Paul Burton

      Given the multiple bathrooms, it shouldn't be too difficult to split a McMansion into two living units - might need to convert one of the 442 bedrooms into a second kitchen, and I worry about the internal accoustics...nonetheless, it shouldn't be insurmountable.

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    2. Michael Hay

      retired

      In reply to Paul Burton

      Paul, why stop at multiple households when there are an adequate number of homeless citizens who could (and would) share a monstrous bedroom just to have a warm place to sleep.
      If our State Government had the foresight to purchase the McMansions at valuation they would also have more than an adequate population seeking Public Transport.
      This could be a major turning point in our community attitudes - not communism, not socialism, not capitalism - merely social conscience.
      As for the political flack - Bring it On !! Perhaps achievement may result !

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    3. Lorraine Hunter

      Retired

      In reply to Paul Burton

      In the same way that Brisbane addressed high set homes from the 70's into larger homes for their growing families by converting underneath garages into extra bedrooms, I'm sure that society will react to the problems of oversupply of large homes(which has to occur) and convert these into the equivalent of townhouses or villas. When times get tough or society just changes direction, innovation rises to the occasion. Oversupply is a foregone conclusion - it can't not happen, and as stats already show, the 40 year olds already leaving inner city for the suburbs with growing families will no doubt find a bargain.

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    4. Jack Arnold

      Director

      In reply to Paul Burton

      Hi Paul, surely your suggestion is a short term solution to what is a greater problem of maldistribution of the Australian population so that 80% live on the eastern coastal strip, looking East into the sunrise when the opportunities lie by looking west over the Great Dividing Range.

      In these days of high speed Internet, why should most government jobs be located in metropolitan areas with their well known problems, when there is no sensible reason why at least some of those jobs should not be re-distributed to urban regional centres creating an economic surge.

      Given that every government job creates about 3.5 new private sector jobs, then 100 government jobs relocated into an urban regional centre would create a total 450 jobs, each supporting Mum, Dad & two kids, for a total movement of 4 x 450 = 1800 persons out of the metro housing market and into fresh air, open spaces, minimal traffic congestion and better value housing.

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  5. CH Soames

    Cytogeneticist

    How about the behemoth in the room; the preposterous state of the housing market here? Despite the supposed efficacy of Australian planning policies, housing demand has somehow been contrived to 'drive' housing 'values' into the stratosphere. Something is certainly out of sequence in this country. It's a trend that needs to be reversed, and of course that would hurt. The manner in which the pain would manifest would be uniquely ours. Rather than focusing on one specific possible catastrophe or another it might be more constructive to look at finding a way to distribute the pain of deflating this big ugly price bubble equitably.

    But of course that would presuppose acknowledgement that there's a problem, something the generation in question might understandably not be highly motivated to provide.

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    1. Jack Arnold

      Director

      In reply to CH Soames

      Hi CH, the behemoth in the room is the invisible foreign investment into a politically stable economy by foreign entities keen to secure wealth, with or without becoming liable for taxation.

      In NZ we recently discovered a lovely beach location in economic decline. A Russian buyer had purchased and closed the local caravan park, cutting off the principal source of visitors and so business.

      I am reminded that Fiji dealt with this matter by banning ownership of land by foreign interests, especially corporations.

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  6. Andrew Smith

    Education Consultant at Australian & International Education Centre

    Curious to see that we need to rely upon US data...... baby boomer bubble is not unique to the US, and has not just happened.

    Unfortunately due to media (esp Fairfax which is more the PR/media arm for real estate industry), the real estate industry itself and our short term horizons, Australia may need to adapt more quickly to planning smaller places to match needs of our community, and hopefully without the need to take out gigantic mortgages for upsized dwellings.....

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  7. Bronwyn Shimmin-Clarke

    Business Analyst

    I have to admit I can't see the problem.

    It seems that boomers will have big houses that they think are worth lots of money that others won't be willing to buy. However, the young families who couldn't afford the unrealistic cost of housing will now be able to get McMansions at reasonable prices.

    The winners are struggling families or singles (who can share or convert as another poster suggested) and the losers are established boomers. I can't see a big problem - unless the boomers have no other investments. And that is a separate problem.

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    1. Rod Govers

      Retired IT administrator

      In reply to Bronwyn Shimmin-Clarke

      "It seems that boomers will have big houses"

      Apart from just a handful of wealthy contemporaries, the only people I know with big houses ie McMansions are tradies in their 30s and 40s.

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  8. Matthew Davies

    Research Analyst

    Seems to me that every one is missing the point here when they're talking about mcmansion suburbia vs inner city terraces. The real point of this article is that its the first sign of the ageing population having a major effect on an economy. The traditional pyramid with lots of buyers underpinning the elderly house sellers at the top will become inverted under an ageing population as there are not enough junior buyers and more elderly sellers. True this will have a long time to play out in Australia as there are still massive amounts of 20/30 somethings who cant get on the property ladder but that will change

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  9. Prue Acton

    Artist and enviromental advocate

    Macmanshions were always environmental disasters (and ugly);when will Councils take a more active roll in designing carbon/climate friendly housing?

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    1. Peter Hindrup

      consultant

      In reply to Prue Acton

      'Macmanshions were always environmental disasters (and ugly)'

      Along with their couple of oversized behemoths sitting in the garages!

      Couldn't agree more. A total failure on the part of 'government' to have ever allowed, or not prevented this type of idiocy.

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    2. Stephen Ralph

      carer

      In reply to Prue Acton

      there have plenty examples over the years - part from scandanavia - and yet we persist with environmentally disastrous dwellings on a depressingly monumental scale.

      even the simple idea of air flow is ignored - hot air rises and it would be so easy to include roof vents to allow that hot air to exit freely, as well as so many other good features that get passed over.

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  10. Stephen Ralph

    carer

    perhaps when all these mc mansions are worth much much less in the future the government may have plenty of community accommodation on the cheap.

    so many of these new housing developments are a sea of roofs with not a green
    tree in sight........road are too narrow to plant trees along the nature strips.

    ugly as

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  11. Felix MacNeill

    Environmental Manager

    As a 1956 boomer, I have to question whether the McMansion is really a boomer phenomonon - I can't recall anyone I know building one when they were young enough to be doing so and had kids that needed housing - my impression is that it's a more recent phenomonon that might more fairly be ascribed, at least as much, to Gen X young-home-buyers.

    But, then again, I should probably be careful of standing in the way of my generation being used as scapegoats for everything that somebody doesn't like - the fury of lost convenience can be frightening...

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    1. Stephen Ralph

      carer

      In reply to Felix MacNeill

      i'm with you felix.........this is a bit of a beat=up.

      when i was in my 20s (70s) the display home phenomena was starting and then it was more or less the traditional 3 bed, 1 bath house - very understated, but seemed so modern and "new".

      the idea of the out-sized mc mansion didn't come along until much later.....so i don't think we BB should wear the criticism.

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    2. Rod Govers

      Retired IT administrator

      In reply to Felix MacNeill

      Completely agree with you, Felix, and with Stephen. My personal experience is that McMansions are not a boomer phenomenon but one that should be applied to Gen X.

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    3. Peter Koulizos

      Tutor in Property at University of South Australia

      In reply to Stephen Ralph

      Great article, Nicole but I'd like to back up the comments of Felix and Stephen. Properties have been getting larger over a number of decades. Straight after WW2, a typical house was 3 bedrooms and 1 bathroom. In the 1970's and 80's, people aspired to build homes with 4 bedrooms, 2 bathrooms, two living areas, 2 dining areas and a double garage. As time wore on, people discovered that they didn't use their formal dining room so they changed to one dining room inside but another dining area outside. Not much happened in the 12990's so far as house sizes were concerned but it was the property boom of the early noughties that saw an explosion in house sizes. Five plus bedrooms, 3 bathrooms, home theatre, triple garages were all the rage.

      Since the GFC, construction of McMansions has diminished and in general house sizes are getting smaller. Will we ever go back to 3 bedrooms and 1 bathroom. Only time will tell!

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    4. Stephen Ralph

      carer

      In reply to Peter Koulizos

      hi peter

      thanks for the info......

      i guess it's not so much size, but need. if a couple have 5 kids they need a big house. if they have one kid it seems silly to have four bedrooms.

      perhaps it would have been smart all those years ago to build houses that could easily be added to over time, with attention paid to the possibilty that add-ons copuld be converted to granny flats or rentals.

      it's still not too late i suppose, but what a wasted opportunity for what in many cases seems rampant consumerism -

      i want what she's having!

      i still think there are a LOT of big houses being built without regard for need.

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    5. Felix MacNeill

      Environmental Manager

      In reply to Stephen Ralph

      Good point about more adaptable housing, Stephen

      By chance, when I was in my early teens, my parents bought a biggish (22 squares) old Edwardian house in Melbourne that had had a modest bathroom and kitchen added to one corner of the house. This meant that, with various permutations of bolting different doors and using the two front and two back doors appropriately, the place was able to house many permutations: my sister and brother-in-law lived in the smaller 'granny-flat' section for several…

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  12. Leith van Onselen

    Economist

    This article mis-diagnoses the US housing situation. The markets with the responsive, market-based planning regimes have experienced less price volatility and more affordable housing than markets with tighter planning and/or restricted land supply:

    http://www.macrobusiness.com.au/2013/02/mb-presentation-housing-supply-price-volatility/

    Further, the overwhelming majority of people in the USA still favour detached housing in the suburbs:

    http://www.newgeography.com/content/002992-americas-future-is-taking-shape-in-the-suburbs

    http://www.newgeography.com/content/002453-suburban-end-times-reality-check

    The author should be arguing to free-up Australia's planning constraints - both in greenfield and pre-existing areas - not arguing to maintain the status quo, which has contributed to Australia's excessive land costs and highly unaffordable housing.

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    1. Steve Hindle

      logged in via email @bigpond.com

      In reply to Leith van Onselen

      I agree that highly prescriptive regulations and excessive fees by local governments, have a lot to do with the high cost of housing. We have moved a long way from when builders used to submit house plans to council and then sit in the waiting room while they were approved. According to my father who was a builder, it usually took about an hour back in the 1960s if it was of a fairly standard design.

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    2. Steve Hindle

      logged in via email @bigpond.com

      In reply to Felix MacNeill

      True the houses were very simple compared to the McMansions of today. Now it is the size of the average loan that is crap.

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  13. John Kelmar

    Small Business Consultant

    For the past 20 years I have been saying the same thing about selling the family home and moving to somewhere more affordable. However my difference is that people will not be moving into the city centers because they are not willing to pay the inflated prices for a city apartment.

    Instead the move will be back to the country towns. The rationale for this is that country town are so much cheaper. The baby boomers will sell their 4x2 $700,000+ suburban home and move to a country town to take possession of a 4x2 (or 4x1, 3x2 etc) for $150,000 or less, giving them around $500,000 to spend on traveling, boats, overseas properties etc.

    It's about time the Government opened their eyes and started providing facilities to support this migration trend, as it will be a definite vote catcher for the party who looks after the "Senior" vote.

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    1. Stephen Ralph

      carer

      In reply to John Kelmar

      i lived in ballarat for about 10 years - the price of housing there is much cheaper than melb.

      there is plenty of fringe developments happening where it's more of the same mini-mc mansions going up.

      but in the centre - mid centre of town there are so many wonderful older houses for sale......and for $250K + you can get a beautiful period home with great features and a yard.

      and if you go up to $500K you can a dream home........that isnt one of these new characterless structures.

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    2. Rod Govers

      Retired IT administrator

      In reply to John Kelmar

      And the NBN, as long as the Liberal govt come September does the right thing, will help with this decentralisation as online medical services and other things make moving from the city to the country, especially for older people, a reasonable and practical decision.

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    3. John Doyle
      John Doyle is a Friend of The Conversation.

      architect

      In reply to John Kelmar

      Moving back to the country is a nice idea.
      However it has drawbacks.
      Many country town are having their medical services downgraded and/or eliminated.
      My old home town is scheduled to have its100 bed hospital demolished. It would be a good town to retire to away from the coast but not likely now.
      Why would older citizens, more in need of medical assistance than average, put themselves in harms way? Even large towns/cities don't match metropolitan centres and probably never will as medical services get rapidly more and more expensive.
      Younger people find jobs scarce in the country.
      Many country towns, particularly the long established ones, have a very cliquey class structure, and that can be a surprise,and daunting. In cities it's easily avoided.
      The government has much work to do to make country living workable.

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    4. Stephen Ralph

      carer

      In reply to John Doyle

      ballarat has excellent hospital facilities - as i'm sure does bendigo.

      its amazing how little you need melbourne when you live in these towns - in fact it's often a nuisance to have to cope with all the city traffic and clutter.

      most peeps dont want the hassle of going to melb unless it's necessary - everything is available in good regional centres.

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    5. Felix MacNeill

      Environmental Manager

      In reply to John Doyle

      Yeah - my dad (who is also an architect) tried the tree change a few years back to a beautiful mud brick house out of Bendigo but, after having a mild stroke, he quickly moved back to a little townhouse in Carlton where he can amble around the corner to his favourite coffee shops and restaurants and the medical facilities are nearby.

      I think John K's idea might be feasible near bigger country cities (think Echuca or Ballarat) that still have reasonably decent medical facilities that might, in fact, be kept alive by some reasonably cashed-up oldies. But I can't see it be a goer in the smaller towns.

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    6. Stephen Ralph

      carer

      In reply to Felix MacNeill

      bendigo & ballarat are well near 100K peeps.

      both have many coffee shops and restaurants and pubs and are now more cosmopolitan than say even 5 years ago.

      ballarat has a great art gallery (as does bendigo), and a renovated theatre for live shows...i saw The Producers there a few years ago and was as good as the melbourne version.

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    7. Felix MacNeill

      Environmental Manager

      In reply to Stephen Ralph

      Yeah, it wasn't bendigo that was my dad's problem, but rather than he was a thirty minute drive out of town and about twenty minute drive even to buy a bottle of milk...after his stroke, he really wasn't that safe to drive so it just became impracticable (he was sad to leave, of course!)

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    8. Jack Arnold

      Director

      In reply to John Kelmar

      Hi John, this tree change to urban regional centres is happening already at a very slow pace because there is no decentralisation of government jobs to motivate metro dwellers.

      The hard reality of tree changing is that the urban regional employment market is very tight with most opportunities taken by locals using family networks. Consequently, there are legion stories of tree changers leaving metro "luxury" and expending their financial assets until they reach the dole queue.

      The tree change success stories are usually retirees or successful business persons who are retiring and want a relaxed life style and suitable education choices with access to modern medical facilities.

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    9. Stephen Ralph

      carer

      In reply to Jack Arnold

      i moved to ballarat from melb about 10+ years ago when the state revenue office (vic) relocated half of it's operations there. it has been a successful move and boosted employment in ballarat. only 13 of around 400+ decided to make the move.

      ibm also has a large workforce in ballarat as well.

      unfortunately that impetus was never taken up and i dont think there was any further decentralisation of government offices from melb.

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  14. John Doyle
    John Doyle is a Friend of The Conversation.

    architect

    I like this article too. I believe that US mortgages are tax deductible, another difference.
    I have long thought that McMansions should be designed [obligated] to easily convert into two + dwellings.
    Otherwise when they eventually become unwanted they will be destroyed and replaced with new housing.
    This is a big waste but looks to me like the future. I haven't heard of it happening yet but I can see it, just as we saw 1920's bungalows etc. demolished to make way for flats and bigger houses.
    This will be a way forward to limit sprawl and cost since services and infrastructure are already in place.
    Then maybe public transport will be more viable.
    So it could have a silver lining at least while our population continues to grow.
    We need planners to do revised LEP's to permit this densification, firstly by reducing lot sizes to inner suburban models, i.e 200 sq.metres.

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  15. Darren Jones

    Biotechnology Manager

    Hi- good article. My hypothesis for some time has been that house prices HAVE to flatten because the demographics will drive up supply (lots of retiring boomers looking to down-size.

    But there is another factor that compound this- the simultaneous lack of demand-side. Take Sydney as an example:

    Let's assume the buyers of a house in the 'burs are typically a nuclear family. According to the last census, in Sydney less than 20% of total household incomes (for family housholds- ie excluding share…

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    1. Felix MacNeill

      Environmental Manager

      In reply to Darren Jones

      Great metaphor about McMansions and colour printers, Darren - thanks for that one!

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  16. Mike Swinbourne

    logged in via Facebook

    So what if the housing bubble bursts? Don't we supposedly live in a capitalist country based on economic principles such as the law of supply and demand?

    Why should young people be continually locked out of a housing market with artificially high prices propped up by government intervention?

    Bring it on. It can't happen soon enough in my book.

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  17. Robert Tony Brklje
    Robert Tony Brklje is a Friend of The Conversation.

    retired

    Australian and US cities differ in one regard that I gather was politely not mentioned, inner suburb poverty, crime, extensive racism and a lack of a genuine social welfare net.
    The spread to the satellite communities and the boon-dongle of a truly massive over the top freeway system that turns areas into an uninhabitable spaghetti of roadways has been driven by this. The need to jump over the inner suburbs to achieve a supposed quality of life. Australia more cunningly tended to push the less desirable…

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    1. Stephen Ralph

      carer

      In reply to Robert Tony Brklje

      hi robert

      what a great idea for cities and suburbs.....have residential living above a shopping complex.

      it's never crossed my mind before and yet is so obviously a fantastic idea for the aged, and others of course.

      it could be adapted in small and large towns and could provide an answer to many problems.

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    2. Felix MacNeill

      Environmental Manager

      In reply to Robert Attila

      At the risk of being a pedant, thr problem can be the noise and late night activity around shoping centres, which also tend to become restaurant/nightlife centres, clashing with residential use.

      It can end up being a bad deal for both: residents get chronic disturbe dsleep and drunks pissing in the doorway but, at the same time, it becomes almost impossible to find anywhere closer than a foul outer-suburban beer-and-brawl barn where bands can play...

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    3. Stephen Ralph

      carer

      In reply to Felix MacNeill

      there's always double and triple plated glass, which i would need if i lived on any busy city/suburban street anyway - better for insulation too.

      needn't be pubs or bars, there are plenty around anyway aren't there.

      might be good to restrict them from any such development - a win win situation.

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  18. Russell T

    IT Consultant

    i am pretty sure i read a book when I was about 13 (44 years ago) about the cycle of urban decay and renewal which was an analysis of the cycle in european cities over their complete life. This indicated then that the process of spread then decay and renewal was based on costs of land, new over existing and time to get to work etc. I think The cycle was usually spread over generations however that process like everything is relative.

    Anyhow I don't see a lot of problems with the model. As inner city urban becomes to expensive people by bigger blocks further out and put bigger houses on them. When the owner mover they will be turned appartments

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  19. Garry Baker

    researcher

    An interesting article, which certainly does examine a few possible elements of life to come in Australia. However, comparisons with the US and their housing supply may not be all that relevant(where there is no real shortage of housing) - given that the GFC was largely predicated on trading financial derivatives geared to home ownership.

    Due to a number of factors(mostly bad country management from Canberra) - Australia does indeed have a very real shortage of places to put people. An untrammeled…

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  20. Peter Hindrup

    consultant

    Perhaps it is time to reconsider the whole concept of city housing?

    http://news.domain.com.au/domain/real-estate-news/land-bankers--sydneys-empty-property-magnates-20111222-1p686.html
    'Land bankers': Sydney's empty property magnates: December 22, 2011
    ‘the startling figure of 122,211 empty Sydney residential dwellings counted by census workers in 2006.’

    http://nsw.greens.org.au/content/greens-call-audit-empty-space-affordable-%E2%80%98convert-rent%E2%80%99-housing
    Greens Call for Audit…

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    1. Chris O'Neill

      Victim of Tony Abbotts Great Big New Tax

      In reply to Peter Hindrup

      "A building standing empty , either a dwelling or a commercial/industrial building, for twelve months ought to attract a ‘plan for use within six months, with applications lodged, or rates will go up by 200 percent."

      Just an attempt to compensate for the real problem, the lack of appropriate land tax. http://blog.lvrg.org.au/

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  21. Russell Warman

    Masters Candidate

    It seems we have created something akin to a Ponzi scheme around housing in Australia where a growing population with growing aspirations maintains high demand and drives ever higher prices allowing those who bought in early to reap generous returns. But the system relies on new entrants having to undertake ever larger mortgages and pay prices that are an ever larger share of their earnings, as well as ongoing aspirations for ever larger houses. Clearly such trends are unlikely to endure forever…

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    1. Stephen Ralph

      carer

      In reply to Russell Warman

      sounds like a good comparison......we are forever being told new housing drives the market, and when it's down the market is down.

      is it the chicken or the egg?

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