How will our children ever be able to afford a house? Whatever the type of housing, one critical aspect is ‘affordability’. Over the past ten years, average house prices (including land) have doubled relative to income. The Australian dream of owning a home is fast becoming a dream available only to some.
The emphasis on home ownership is one fostered by conservative politicians and the land development industry. As such, most public debate about affordability has focused on those people who are just able to secure a loan and eventually own their own home. Recent first home buyers are, on average, allocating nearly 40 per cent of their income towards home loan repayments, a third more than five years ago.
The market price of a house lot is determined by its location, the available supply of land and the size of the lot itself. Ultimately, the market sets the price based on these factors.
The availability of land for housing construction has thus become a critical factor in keeping private housing affordable. The Sydney basin, for example, has few remaining large areas of undeveloped land. There have been calls from land developers recently to use land ‘locked up in open space and national parks’ for housing. They agree (with their hands on their hearts) about the necessity of preserving national parks, yet argue that some parks and other designated open space should be subdivided. Even if this were a viable solution what happens when demand overtakes supply?
The problem of limited availability of land is not helped by a trend towards larger houses being occupied by fewer people. Recent Australian Bureau of Statistics figures reveal that the average footprint of new homes in NSW has increased by a staggering 53 per cent between 1985 and 2003. Over the same period, average household occupancy fell from over three people to less than two. Even though larger houses are being built on smaller lots this is an unsustainable situation. The old quarter-acre block (a bit over 1000 square metres) is now often reduced to 450 square metres or less. There is clearly a limit as to how much a single house lot can be reduced in area.
The land component in the ‘house and land’ equation cannot easily be reduced unless normal suburban densities are increased by building more integrated, medium density attached housing, that is, more houses on less land. Similarly, there is little one