Great article! What if we could start with one great household at a time within our established housing by doubling the current density while reducing the costs? It would seem like a good immediate action.
Really good read, I can see the same circumstance unfolding in Perth and we have historically been worse than SEQ at delivering density.
The reality we face here is an attempt to accelerate greenfield supply as the only way to get a reasonable volume of housing on the ground in the next 3-5 years. I can count on one hand the number of apartment projects under construction locally at the moment.
Thanks for reading! Yes Brisbane and Perth often seem to find themselves in the same boat. I think the problem is it’s still too easy / cheap to get a reasonably well located detached dwelling - while that remains true neither city will undergo any significant densification. Not much policy can do to change that.
Detached housing is built by non union labour, apartment buildings are all constructed by CFMEU members. As long as that is the case detached housing will always be cheaper
It's not true that all apartments are construction by union labour.
It's very messy and informal. The rule of thumb in Melbourne is that subbies and builders who contract projects up to say $20m value were historically left alone by the CFMEU. Pre-covid you might be able to build 40 apartments for that cost (less now).
If you are a subbie who is engaged on projects from $5m to $50m, you will generally receive "pressure" to sign an EBA by virtue of your involvement in $50m projects. So even builders who do not directly attract the attention of the CFMEU, they may end up contracting a mix of union and non-union subbies.
This is the general situation for builders doing smaller apartment buildings.
All these types of articles are making me very depressed and I have no solutions other than socialism.
In theory I should be sitting pretty. 4 bed house built about 4 years ago located about 5km from the Brisbane CBD. I have been looking to downsize and ideally I want a small home on a small block, but do you think I can find one that isn't located in the boondocks? I am not keen on units, especially newly built units, so that leaves villas. Went to open house on the weekend - a villa I was negotiating to buy privately got brought for $770k just last month. This weekend a similar villa in the same estate went for $820k. The price differential between a bigger and newer detached house ($1.4m) and an older (1990's) smaller villa is shrinking and I can't see a value proposition in selling. Luckily I don't have to sell, but it is getter harder, if not impossible, to find a decent house for the older chap.
I walked away from that open house recalling the words of Ross Barker (demographer) ringing in my years when in the mid 1990's he was talking of the demographic time bomb of an aging population and the need to start planning for more diverse housing needs NOW! So we dutifully beavered away on upzoning (TOD), smaller lots and even densification in the middle suburbs. But you can lead a horse to water, but you can't make them drink. Developers are like lemmings - they go with what works and if their real estate pals are whispering "build bigger houses" whether they be attached or detached - that is what we got. Smaller houses on smaller lots wasn't done and I suspect that why villa prices are shooting up - scarcity value for a cohort who are crying out for this type of living (i.e. a house, albeit a mini-house without the high costs of strata units).
Now that is just one cohort and there are plenty of others in far worst position, so I am not here to complain. But my wider point is there seems to be a multitude of problems out there and there will NEVER be a perfect alignment of positive things, but instead a piling up of negative things that I just can't see any solution working on a bigger scale (apart from socialism)!
If we are to go down the apartment route, then I thought this video was a good design experiment https://www.youtube.com/watch?v=011TOfugais. It would have some issues with Building Standards, but if they can demonstrate achieving the same outcome, some of these ideas are brilliant, especially given the paucity of bad design and pokey places that pass for modern apartment living nowadays.
Sorry to have bummed you out Neil! I do tend to write about quite negative ideas yet you keep coming back, so it takes two to tango haha. I really enjoyed that video though! So many great examples of better ways of doing housing typologies.
Re: socialism - I don't think it's a *hard* choice between socialism and capitalism. I'd love to see some more socialised style programs via a public developer like you see in Singapore and Vienna. Then at least, housing is getting built that serves the portion of the market that the private sector isn't able to provide for (at least right now).
Yes I am a glutton for punishment, but I was being tongue in check with the socialism remark, more out of despair for a workable solution being on the horizon for everybody who want a roof over their head at a reasonable price.
But yes, Singapore and Vienna are often quoted as possible models. Personally I think the Vienna model is more realistic (land cooperatives), but it did start in a time of "Red Vienna" when there was a socialist government and the operation of that model has been parred back significantly since then, so that baseline stock is slowly diminishing (https://www.abc.net.au/listen/programs/rearvision/rear-vision/102960834). I don't think Australians are ready for the Singapore model, but it is great if you accept the whole premise that goes with it (i.e. compulsory acquisitions of private property at reduced valuations and public development corporations).
Keep up the good work - I like your style, very proletariat comrade!
I don't really understand how throwing more money at an industry is ever going to make it cheaper? My understanding is a lot of these "militant bakers union demanding extortionate wages for seemingly unskilled tasks" are first negotiated for government contracts, with the "extortionate wages" flowing down into the rest of the industry. Having government involvement in these projects would seem to allow for an extra point of leverage for these "militant bakers unions" to push for even higher wages.
If we're willing to pay high prices for apartments then apartment prices will stay high. Spending government money instead of developer money doesn't change that.
I don't disagree with you in principle, but the point I was trying to make is that given the supply shortage, we really can't afford to spend the next 5 years building a small handful of apartments. We need to keep building what we can during this period so that the demand/supply situation isn't significantly worse down the road. I don't think this should be a permanent policy for all the reasons you outline.
Ultimately I'd like to see a much stronger public developer like you see in Singapore and Vienna to better serve the lower half of the market - because the private sector literally can't produce anything affordable right now.
The demand supply situation right now seems to be that these buildings aren't worth building.
Do you think that a stronger public developer would be able to deliver housing cheaper? What's the mechanism for this? I see this option discussed a bit, but it's unclear to me how it reduces cost. How did we seem to be able to build buildings cheaper in the past?
I don't think a public developer would be able to deliver housing cheaper per se in that I don't think the construction costs would be lower. But I do think they would be able to use the public housing to provide subsidised rents which would make them cheaper to renters or sell them at a cheaper rate to buyers. This is obviously a big mindset change from how we do things now where the government is expected to make money or at least break even in such ventures. To me this would require us viewing housing as critical infrastructure rather than as an investment, similar to how we look at roads - where we don't expect them to make money. The way I see it is that right now the private sector cannot meet the needs of a huge percentage of the market, and if we don't want people living in tents, the only way to provide housing is to just build it and put people in it. If this requires higher taxes and everyone else to shoulder the burden of this, then so be it. If we want property value growth to outpace wages growth forever and ever, then this is the price of doing business.
In terms of how to actually reduce construction costs, I think there's really only a couple of ways to do it.
- Innovations in the construction industry via modular construction / 3D printing (I have no idea whether or not any of this is realistic)
- Deregulation of key controls like minimum parking requirements, minimum apartment sizes, floor areas and the like
- Significantly reduce the tax burden from the housing industry which accounts for a non-trivial proportion of overall costs
- Import cheap labour from the third world and keep them in worker camps like they do in Saudi Arabia - hopefully it won't come to this, but something tells me its gonna happen
On the question of how did we seem to be able to build buildings cheaper in the past - this I would absolutely love to know the answer to. If I had to guess it would be a combination of the following:
- Labour being significantly more available and therefore lower value
- Inequality being significantly worse (if we're talking the Gilded Age era), with the wealthy generally having more money to spend on buildings.
- Significantly lower burden of regulations, which allows designers and builders to really fine tune developments to suit the conditions of the site and the needs of the user
- When talking about public housing, a lot of it was built partially completed, which allowed the owners to extend and renovate them in their own time. I think generally the average bloke was way more handy back in the day.
I would be shocked to see us import labour for housing living in camps, but I guess things are getting quite bad? I found this article from construction physics on the cost of a home and why it’s hard to make cheaper. https://www.construction-physics.com/p/what-makes-housing-so-expensive
He’s also done one on 3d printed home. Generally it seems that technological innovation in housing is really really difficult
High-rise construction is cost prohibitive compared to single or two story residential. The mass and height of the structure drives up the cost. In the States as much 4 times the cost.
Urban high-rise affordability is generally achieved by smaller units, not that that's bad.
That does have demographic implications for families.
Great article! What if we could start with one great household at a time within our established housing by doubling the current density while reducing the costs? It would seem like a good immediate action.
Really good read, I can see the same circumstance unfolding in Perth and we have historically been worse than SEQ at delivering density.
The reality we face here is an attempt to accelerate greenfield supply as the only way to get a reasonable volume of housing on the ground in the next 3-5 years. I can count on one hand the number of apartment projects under construction locally at the moment.
Thanks for reading! Yes Brisbane and Perth often seem to find themselves in the same boat. I think the problem is it’s still too easy / cheap to get a reasonably well located detached dwelling - while that remains true neither city will undergo any significant densification. Not much policy can do to change that.
Detached housing is built by non union labour, apartment buildings are all constructed by CFMEU members. As long as that is the case detached housing will always be cheaper
Is that true that apartments are all constructed by CFMEU? I thought it was mostly government projects that they have all sewn up?
Don’t know about the labor source, but the higher you build, the higher the construction cost per square meter.
It's not true that all apartments are construction by union labour.
It's very messy and informal. The rule of thumb in Melbourne is that subbies and builders who contract projects up to say $20m value were historically left alone by the CFMEU. Pre-covid you might be able to build 40 apartments for that cost (less now).
If you are a subbie who is engaged on projects from $5m to $50m, you will generally receive "pressure" to sign an EBA by virtue of your involvement in $50m projects. So even builders who do not directly attract the attention of the CFMEU, they may end up contracting a mix of union and non-union subbies.
This is the general situation for builders doing smaller apartment buildings.
All these types of articles are making me very depressed and I have no solutions other than socialism.
In theory I should be sitting pretty. 4 bed house built about 4 years ago located about 5km from the Brisbane CBD. I have been looking to downsize and ideally I want a small home on a small block, but do you think I can find one that isn't located in the boondocks? I am not keen on units, especially newly built units, so that leaves villas. Went to open house on the weekend - a villa I was negotiating to buy privately got brought for $770k just last month. This weekend a similar villa in the same estate went for $820k. The price differential between a bigger and newer detached house ($1.4m) and an older (1990's) smaller villa is shrinking and I can't see a value proposition in selling. Luckily I don't have to sell, but it is getter harder, if not impossible, to find a decent house for the older chap.
I walked away from that open house recalling the words of Ross Barker (demographer) ringing in my years when in the mid 1990's he was talking of the demographic time bomb of an aging population and the need to start planning for more diverse housing needs NOW! So we dutifully beavered away on upzoning (TOD), smaller lots and even densification in the middle suburbs. But you can lead a horse to water, but you can't make them drink. Developers are like lemmings - they go with what works and if their real estate pals are whispering "build bigger houses" whether they be attached or detached - that is what we got. Smaller houses on smaller lots wasn't done and I suspect that why villa prices are shooting up - scarcity value for a cohort who are crying out for this type of living (i.e. a house, albeit a mini-house without the high costs of strata units).
Now that is just one cohort and there are plenty of others in far worst position, so I am not here to complain. But my wider point is there seems to be a multitude of problems out there and there will NEVER be a perfect alignment of positive things, but instead a piling up of negative things that I just can't see any solution working on a bigger scale (apart from socialism)!
If we are to go down the apartment route, then I thought this video was a good design experiment https://www.youtube.com/watch?v=011TOfugais. It would have some issues with Building Standards, but if they can demonstrate achieving the same outcome, some of these ideas are brilliant, especially given the paucity of bad design and pokey places that pass for modern apartment living nowadays.
Sorry to have bummed you out Neil! I do tend to write about quite negative ideas yet you keep coming back, so it takes two to tango haha. I really enjoyed that video though! So many great examples of better ways of doing housing typologies.
Re: socialism - I don't think it's a *hard* choice between socialism and capitalism. I'd love to see some more socialised style programs via a public developer like you see in Singapore and Vienna. Then at least, housing is getting built that serves the portion of the market that the private sector isn't able to provide for (at least right now).
Yes I am a glutton for punishment, but I was being tongue in check with the socialism remark, more out of despair for a workable solution being on the horizon for everybody who want a roof over their head at a reasonable price.
But yes, Singapore and Vienna are often quoted as possible models. Personally I think the Vienna model is more realistic (land cooperatives), but it did start in a time of "Red Vienna" when there was a socialist government and the operation of that model has been parred back significantly since then, so that baseline stock is slowly diminishing (https://www.abc.net.au/listen/programs/rearvision/rear-vision/102960834). I don't think Australians are ready for the Singapore model, but it is great if you accept the whole premise that goes with it (i.e. compulsory acquisitions of private property at reduced valuations and public development corporations).
Keep up the good work - I like your style, very proletariat comrade!
I don't really understand how throwing more money at an industry is ever going to make it cheaper? My understanding is a lot of these "militant bakers union demanding extortionate wages for seemingly unskilled tasks" are first negotiated for government contracts, with the "extortionate wages" flowing down into the rest of the industry. Having government involvement in these projects would seem to allow for an extra point of leverage for these "militant bakers unions" to push for even higher wages.
If we're willing to pay high prices for apartments then apartment prices will stay high. Spending government money instead of developer money doesn't change that.
Thanks for reading and commenting Chris!
I don't disagree with you in principle, but the point I was trying to make is that given the supply shortage, we really can't afford to spend the next 5 years building a small handful of apartments. We need to keep building what we can during this period so that the demand/supply situation isn't significantly worse down the road. I don't think this should be a permanent policy for all the reasons you outline.
Ultimately I'd like to see a much stronger public developer like you see in Singapore and Vienna to better serve the lower half of the market - because the private sector literally can't produce anything affordable right now.
The demand supply situation right now seems to be that these buildings aren't worth building.
Do you think that a stronger public developer would be able to deliver housing cheaper? What's the mechanism for this? I see this option discussed a bit, but it's unclear to me how it reduces cost. How did we seem to be able to build buildings cheaper in the past?
I don't think a public developer would be able to deliver housing cheaper per se in that I don't think the construction costs would be lower. But I do think they would be able to use the public housing to provide subsidised rents which would make them cheaper to renters or sell them at a cheaper rate to buyers. This is obviously a big mindset change from how we do things now where the government is expected to make money or at least break even in such ventures. To me this would require us viewing housing as critical infrastructure rather than as an investment, similar to how we look at roads - where we don't expect them to make money. The way I see it is that right now the private sector cannot meet the needs of a huge percentage of the market, and if we don't want people living in tents, the only way to provide housing is to just build it and put people in it. If this requires higher taxes and everyone else to shoulder the burden of this, then so be it. If we want property value growth to outpace wages growth forever and ever, then this is the price of doing business.
In terms of how to actually reduce construction costs, I think there's really only a couple of ways to do it.
- Innovations in the construction industry via modular construction / 3D printing (I have no idea whether or not any of this is realistic)
- Deregulation of key controls like minimum parking requirements, minimum apartment sizes, floor areas and the like
- Significantly reduce the tax burden from the housing industry which accounts for a non-trivial proportion of overall costs
- Import cheap labour from the third world and keep them in worker camps like they do in Saudi Arabia - hopefully it won't come to this, but something tells me its gonna happen
On the question of how did we seem to be able to build buildings cheaper in the past - this I would absolutely love to know the answer to. If I had to guess it would be a combination of the following:
- Labour being significantly more available and therefore lower value
- Inequality being significantly worse (if we're talking the Gilded Age era), with the wealthy generally having more money to spend on buildings.
- Significantly lower burden of regulations, which allows designers and builders to really fine tune developments to suit the conditions of the site and the needs of the user
- When talking about public housing, a lot of it was built partially completed, which allowed the owners to extend and renovate them in their own time. I think generally the average bloke was way more handy back in the day.
I would be shocked to see us import labour for housing living in camps, but I guess things are getting quite bad? I found this article from construction physics on the cost of a home and why it’s hard to make cheaper. https://www.construction-physics.com/p/what-makes-housing-so-expensive
He’s also done one on 3d printed home. Generally it seems that technological innovation in housing is really really difficult
https://www.construction-physics.com/p/what-progress-has-icon-made-on-3d?utm_source=publication-search
High-rise construction is cost prohibitive compared to single or two story residential. The mass and height of the structure drives up the cost. In the States as much 4 times the cost.
Urban high-rise affordability is generally achieved by smaller units, not that that's bad.
That does have demographic implications for families.