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Are Dual Occupancy Homes a Solution to the Housing Crisis?

Are Dual Occupancy Homes a Solution to the Housing Crisis?

The demand for housing in Australia far outweighs the supply, leading to skyrocketing prices and limited availability. Dual occupancy homes and other medium-density dwellings are an ideal means of increasing supply whilst also being an attractive option for many landowners either for their own housing needs or for generating rental profits.

Why is Australia’s housing in a situation of crisis and how can dual occupancy homes help to alleviate the problem?

Australian Families are Getting Smaller

On the demand side of the equation, it’s essential to look on a macro scale where that demand is coming from. Fertility rates in Australia have been declining, the total fertility rate (TFR) has dropped from a peak of 3.55 live births per woman in 1961 to approximately 1.66 in 2020-2021. A TFR of 2.1 is required to maintain a sustainable population, so this means that, all other things held equal, Australia certainly has an aging population. This is when demographics get older and smaller over time.

For housing, this means that demand should get lower and lower and housing prices should be decreasing, but this clearly isn’t happening and housing prices have skyrocketed for nearly a decade and especially post-pandemic.

Demand Continually Increases with Net Migration

Net migration to Australia in the year ending in June 2023 was recorded at 518,087, an incredibly sharp increase since the country reopened after the covid lockdowns in 2021 and significantly surpassing net migration figures from previous years. 

When compared with Australia’s sharply declining birthrate and a stagnant population of 106,058 in the same time period, it quickly becomes apparent that the lion’s share of the demand for housing is now coming from overseas migration. By scale, the amount of migration is significantly higher than ever before.

Furthermore, more than half of overseas migrants choose Victoria and New South Wales, and most likely, in or around the cities of Melbourne and Sydney, respectively. These large urban areas are already experiencing a strain on housing as is, and without any significant changes will likely only become more and more strained going forward.

Dual Occupancy Increases Housing Supply

In order to satisfy the enormous demand for housing, new dwellings must be built. Data from 2023 shows only 37,207 new dwellings were commenced in that year. Not only are the number of new units commenced decreasing year over year, but quite obviously this number is nowhere close to the number required to house half a million migrants every year.

Dual occupancy homes typically take one older property, usually a larger home built by the previous generations, and subdivide it into two plots to create two newer, smaller units more well-adapted to the smaller family sizes of today.

This typically means that a dual occupancy home is at least a net +1 towards housing supply, all using the same amount of land. For simply adding more housing using the same amount of land, the most effective option is going to be tall apartment blocks that potentially add 40-50 new dwellings (or more), but of course many families do not want to live in small, confined spaces without access to their own private garden, for example.

Dual occupancy homes are medium-density housing that provide ample space to live and to raise children and to keep a dog happy and healthy. While they will not resolve the housing crisis alone, they do add to the amount of housing supply and provide families with a wonderful alternative to other housing options.

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