A new report from two property research companies proposes an innovative solution to the national housing crisis, which would bring much needed dwelling supply to the market relatively quickly and possibly at less expense than the high-density apartment projects around transport hubs currently favoured by governments.
Property analytics experts CoreLogic and Archistar - an AI-driven property solutions firm, have produced a report entitled “The Missing Middle”, which finds that 3 million additional strata units could be built on almost 1.3 million sites across Australia’s capital cities.
The background
CoreLogic and Archistar say the National Housing Accord, agreed between the Federal and state governments and the housing industry in 2022, has laid down the challenge of delivering new housing supply.
The Accord has set an ambitious target of delivering 1.2 million new ‘well-located’ homes nationally by mid-2029.
The Federal and state governments have said they want the bulk of these homes to be “infill developments” in existing urban areas that already have good access to transport and other services.
However, while state governments (particularly in New South Wales and Victoria) have tended to emphasise the building of large apartment developments in the vicinity of train stations, existing shopping precincts, or “activity centres”, CoreLogic and Archistar says the Accord presents the “greatest opportunity for medium-density development” in Australia’s capital cities.
The details
“The Missing Middle” report assesses the development potential of land that currently doesn’t have a strata development and where local regulations allow for higher-density dwellings.
It identifies the potential to build more than three million additional strata units over almost 1.3 million sites across Australia’s capital cities.
Almost 500,000 (16%) of these new homes would be situated on what CoreLogic and Archistar term ‘low complexity’ sites.
These are potential development sites that are largely level, not subject to heritage rules or “overlays”, or at risk of natural hazards such as bushfire or flooding.
The largest number of sites were identified in Melbourne, where the analysis found more than 472,000 lots had the potential to deliver almost 1.2 million new strata units, followed by Sydney with around 351,000 sites and the potential for more than 934,000 new units.
Melbourne
“The Missing Middle” report says 12 of the top 30 council regions for strata infill opportunities
were located in the Greater Melbourne area.
While Mornington Peninsula Shire LGA ranked highly, with the potential for 98,367 units to be built, the authors note that the majority of sites (54%) had a high complexity score, suggesting developers may look towards other areas for more straight-forward infill opportunities.
Wyndham City LGA in Melbourne’s west also ranked highly, with almost 44,000 sites identified and the opportunity to deliver just over 97,600 strata units.
More than 60% of these sites were identified as low complexity, suggesting this area may be a better prospect for this type of development.
Sydney
Canterbury-Bankstown LGA was identified as the council area with the largest potential for infill strata unit development in Sydney, with 15,008 sites identified, yielding the potential for 87,886 units.
“Although only 11.1% of these showed a low complexity score, the Canterbury-Bankstown
region recorded the highest number of strata units that could potentially be built with a low
complexity score (10,139) of any Greater Sydney LGA,” the report says.
Brisbane
The large land area of Brisbane City Council gives it the highest potential for infill
strata development in Australia, according to CoreLogic and Archistar.
The firms also praised the LGA’s “clear urban footprint and town plan that allows for strategic infill”.
However, the report found only 5.1% of strata development sites identified in the City of Brisbane were classified as low complexity, “suggesting that delivering new strata supply could involve longer time frames or cost.”
Well located medium density versus apartments
CoreLogic and Archistar say nearly 3 in 5 (57%) of the sites they identified nationally are within 2km of an existing train station, “offering important transport links for commuters while also leveraging the significant capital investment in transport infrastructure.”
“The Missing Middle” report deliberately excluded high-rise and mixed-use (retail and residential) developments, with the average number of potential units per site coming in at just 2.5.
“Importantly, this analysis isn’t identifying or recommending high-rise apartments as a solution to the housing crisis,” says CoreLogic’s Research Director Tim Lawless.
“It identifies opportunities for low-rise strata units that would typically take the form of townhouses, duplexes or triplexes.
“This style of infill development is often more sympathetic to the local character and tends to encounter less resistance from local residents who are often wary of higher densities.”
This last point was starkly illustrated by the outrage generated recently in gentrified suburbs like Melbourne’s Brighton, with residents claiming the unique character of their neighbourhood would be ruined by state government proposals for high-rise apartments around train stations.
The lower construction costs of medium density strata-title projects also addresses the concerns expressed by developers that many high-rise apartment projects are uneconomical to build at a price that’s acceptable to buyers.