RussellEbertHandball
Flick pass expert
Read this article by Alan Kohler from a couple of days ago about housing and was genuinely surprised by what he wrote about apartments being more expensive than houses to build.
www.thenewdaily.com.au
The Victorian government’s blizzard of housing announcements this month, mainly directed at building a lot of high-rise apartments in 50 close-in neighbourhoods near existing infrastructure, is the first serious, specific effort to deal with housing affordability.
As the Financial Review’s John Kehoe wrote: “Australia is belatedly experiencing an outbreak in good housing policy.”
It’s good, yes, but will it work? Unfortunately, no.
That’s partly because residents are going to fight it – they’ve already started – and while the state government can forcibly provide planning permits, it won’t last beyond November 2026 because the Opposition will no doubt oppose it to win votes in those suburbs, and having won the election, cancel it.
It’s also partly because Australians don’t want to raise families in three-bedroom apartments; focusing housing supply on flats will probably just drive up the prices of houses, as they become relatively scarce.
You heard right … apartments are dearer than houses, especially existing houses, but also new ones.
Developer Max Shifman told me that a developer needs to sell apartments for at least $14,000 per square metre while a house sells for about $4000 per square metre.
The difference is partly explained by the rule that any building above three storeys must be unionised for insurance and safety purposes.
And as we have learnt recently with stories linking the construction union – the CFMEU – with organised crime and bikie links, not to mention thuggery and intimidation, this is a very effective union at getting higher pay and better (i.e. more expensive) conditions for its members.
That $14,000 price per square metre translates into $650,000 for a small one-bedroom apartment, $1 million for a two-bedroom apartment of 70 square metres and about $1.5 million for a reasonably sized three-bedroom “family” apartment or more. These are not “affordable” dwellings.
As a result the Australian apartment market is now almost entirely directed towards building luxury apartments for downsizers.
My email inbox these days is filled with ads for posh apartments in existing suburbs near train stations (because my recent house-hunting has alerted the marketing bots that my wife and I are in the process of downsizing).
And what I’m seeing in the emails are all premium, luxury apartments. They’re going up everywhere, and most of them look very nice. But a friendly real estate agent told us not to touch any of them; some are well-built, many are made of paper mache, he said, and it’s hard to know which is which till you’re in.
Alan Kohler: Housing affordability is largely a matter of tax reform
The Victorian government’s blizzard of housing announcements this month is the first serious effort to deal with housing affordability.
The Victorian government’s blizzard of housing announcements this month, mainly directed at building a lot of high-rise apartments in 50 close-in neighbourhoods near existing infrastructure, is the first serious, specific effort to deal with housing affordability.
As the Financial Review’s John Kehoe wrote: “Australia is belatedly experiencing an outbreak in good housing policy.”
It’s good, yes, but will it work? Unfortunately, no.
That’s partly because residents are going to fight it – they’ve already started – and while the state government can forcibly provide planning permits, it won’t last beyond November 2026 because the Opposition will no doubt oppose it to win votes in those suburbs, and having won the election, cancel it.
It’s also partly because Australians don’t want to raise families in three-bedroom apartments; focusing housing supply on flats will probably just drive up the prices of houses, as they become relatively scarce.
Apartments cost more to build
But the main reason it won’t work is that apartments are more expensive to build, and therefore cost more to buy.You heard right … apartments are dearer than houses, especially existing houses, but also new ones.
Developer Max Shifman told me that a developer needs to sell apartments for at least $14,000 per square metre while a house sells for about $4000 per square metre.
The difference is partly explained by the rule that any building above three storeys must be unionised for insurance and safety purposes.
And as we have learnt recently with stories linking the construction union – the CFMEU – with organised crime and bikie links, not to mention thuggery and intimidation, this is a very effective union at getting higher pay and better (i.e. more expensive) conditions for its members.
How it works
As Shifman put it, anything needing a crane is a whole different proposition, in terms of building materials, regulations, insurance and unionisation, and the cost of building a block of apartments has increased by about 40 per cent since the pandemic.That $14,000 price per square metre translates into $650,000 for a small one-bedroom apartment, $1 million for a two-bedroom apartment of 70 square metres and about $1.5 million for a reasonably sized three-bedroom “family” apartment or more. These are not “affordable” dwellings.
As a result the Australian apartment market is now almost entirely directed towards building luxury apartments for downsizers.
My email inbox these days is filled with ads for posh apartments in existing suburbs near train stations (because my recent house-hunting has alerted the marketing bots that my wife and I are in the process of downsizing).
And what I’m seeing in the emails are all premium, luxury apartments. They’re going up everywhere, and most of them look very nice. But a friendly real estate agent told us not to touch any of them; some are well-built, many are made of paper mache, he said, and it’s hard to know which is which till you’re in.
