Are We Building Too Many New Homes?

Conventional wisdom says that Australia’s household size is falling. property8

In other words, there are fewer people living in our homes.

That is somewhat understandable, given the barrage of marketing messages reinforcing that we are increasingly living alone or as couples.

But the facts show a very different trend.

Since the mid-2000s, the average household size has been increasing. See chart 1 below


1. Average number of people per dwelling


Graph MM

At present, there are 2.6 people per occupied dwelling.

In short, this means we don’t have to build as many new homes to house the same number of people as we did in, say, 2006.

There are several reasons why the average household size is on the rise – different overseas migrant mix; recent baby bonus; HECS debts; aging demographics and low housing affordability.

Also, during periods of undersupply – as shown in chart 2 – more people share accommodation than otherwise might be the case.

Our modelling shows that Australia’s new housing market was undersupplied.

However, our current level of new housing construction suggests we are now overbuilding once more.

Again, see chart 2.

This is another reason why we are likely to see new housing starts begin to fall this year


2. New housing supply/demand balance


Graph MM2



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Michael Matusik


Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive

'Are We Building Too Many New Homes?' have 1 comment

  1. February 12, 2016 @ 8:38 am Dean Collins

    Whats the source of chart Number 2? also is there a longer timeline version of it?


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