Thursday, September 3, 2009

Not dead yet!

Despite what can read like attempts to will it to death, the family unit is proving resilient.

Let’s bust a myth. You’ll have read plenty of reports that the traditional family unit is in decline, and that single person households or group households are on the rise. This, we are told, is going to mean a fundamental change to the way we provide housing and lifestyle choices.

It’s true that there have been some marginal shifts in the rise of single person households. The proportion has grown from 21% of all households in 1991 to 24% in 2001. But this is a shift at the margin, the causes of which aren’t necessarily due to wholesale disgruntlement with the family unit but also to drivers like the ageing population (which invariably produces more widows living longer).

The biological urge to pair with a partner of the opposite sex and produce children is proving more stubborn than some forecasters and ‘trend spotters’ might like to believe.

Only this week came evidence from the ABS (‘Marriages and Divorces in Australia 2008’) that the number of marriages registered in Australia last year was at a 20 year high, while the overall divorce rate was at a 20 year low.

That sits at odds with what some commentators are saying, like this from KPMG’s Bernard Salt:

“There's gay couples, divorcees, married couples who don't have kids, singles, ex-pats, de facto couples and we can't forget that we have an ageing population”

“Those groups didn't exist 30 or 40 years ago, so there's different kinds of families now who have different housing requirements. There's less need for basic three-bedroom brick veneer homes in the suburbs.”

Really? Cause and effect are open to debate here. The shift away from the suburban detached house isn’t as much driven by changing family units or consumer choice but instead driven by deterministic planning policies which are restricting the supply of new suburban land in favour of high density living.

Salt again:

“We're talking density housing," he says. "There'll be less backyard cricket and more communal facilities like parklands. It's going to mean getting used to living close to people, which is a cultural shift for Aussies who are used to their own place in suburbia.”

The same Courier Mail article which quoted Salt also featured a lesbian couple, promoted as ‘the face of the future’:

SARA Birtwhistle and Wendy Ellis are the faces of the future. No longer will a typical Australian family comprise mum, dad and two children,” went the introduction.

What, never again? I know same sex couples should no longer fear the sort of social pariah status of recent history, but I didn’t know they were soon going to be made compulsory. (The stats also say otherwise – of all couples, heterosexual couples still comprise 99.5% of couples). Quoting one of the couple in the article:

"We've lived in an apartment in the Valley and New Farm since we've been together, which is 11 years," she says. "It's a nice lifestyle with good restaurants, cultural facilities and like-minded people who inhabit the area.

"Being stuck in the middle of suburbia with families gives me the heebie-jeebies."

How awful! But the reality is that family units are not in decline anywhere near the extent predicted. This has some implications not just for housing styles, but also for ownership.

The Australia Parliamentary Library earlier this year produced an interesting summary of home ownership trends by family types. It concluded that:

One of the main demographic influences on home ownership is age. Rates of home ownership increase progressively with age, reflecting the different life cycle stages. The relationship between age and home ownership has meant that Australia’s ageing population has put upward pressure on the home ownership rate.

On the other hand it says:

Another demographic influence on home ownership is household composition. Rates of home ownership above the average for all households have been experienced by couple families while rates below the average have been experienced by one parent families and lone person households. Changes in the composition of Australian households from couple families to other family types have therefore acted to put downward pressure on the home ownership rate.

The reason for the latter is that non traditional household types are more likely to rent than own (with or without mortgage). But then it concludes:

Given the wide variety of factors that influence home ownership, their net effect has been, surprisingly, to leave Australia’s home ownership rate largely unchanged for more than 40 years.

That tends to support a largely status quo situation in terms of household composition. What is true, however, is that households are getting smaller. In 1960, the average household was 3.5 persons. It’s now around 2.7 persons. Some commentators have seized on that fact to predict (or more frequently, proclaim) that housing should get smaller, not larger. (The derision of so called suburban McMansions often raises this as its justification).

(For a detailed analysis of family and household types, this report by the Australian Institute of Family Studies is worth a read).

But standards have changed somewhat in that time also. I can’t think of any developer who would bravely build a new house of a 1960s design with only one toilet, three smallish bedrooms, and a relatively cramped kitchen and dining room. (A movie worth watching is a recent Australian flick called ‘Subdivision’ which weaves into the plot the tension between old and new style housing).

So while households are getting smaller, the trend has been to demand more space per person. And given that the majority of household types remain couples (with children, or without – the latter predominantly in the pre-child phase or empty nesters) it is just too early to predict the demise of the family home.

Households like the lesbian couple featured as ‘the face of the future’ do tend to dominant social and market commentary. But if the real bread and butter demand for housing is going to continue to come from couples planning children, or with children at home, or with children who have left home but who may want to visit, then how comfortably does that sit with the current crop of planning schemes which are directed to provide housing choice which is the inverse of housing demand?

Will there be enough families buying the proposed volume of high density living units to sustain the market? Or will these become temporary abodes, rented for a period until the family can move out to join their own ‘like minded people’ in the burbs, with children who have room for some backyard cricket and the pet dog?

It’s fine for the commentators to predict the demise of the family unit household. But it’s not dead yet – far from it. The challenge for the market is to avoid the distraction of predictions and forecasts based on changes at the margin, and to supply the housing needs of the majority, notwithstanding the constraints of planning schemes that may not align with majority consumer preference or needs.

1 comment:

  1. This is a great exercise in proving there are lies, damned lies, and statistics, Ross. Not that I believe for a moment that our leading demographer is lying. But it's fascinating how statistics can be interpreted in different ways. One of the problems Bernard salt faces now that he is a 'celebrity commentator' is the need to come up with something new, fresh and intriguing every week. That can exert sufficient presure to distort one's thinking (subconsciously or consciously). It is all too easy to rush into assessments that life (and our world) is changing at a rapid rate. Yes, change is an ever-present reality but some things don't just conform to fashion - certainly not at the pace that Mr Salt was suggesting. Your intelligent insights are a sensible caution to those who would accept data at face value without probing it carefully. Let the business decision-maker beware!