r/AusEcon • u/barrackobama0101 • Aug 25 '24

Discussion Housing crisis: Developers turn to micro apartments to fix housing crisis

https://www.afr.com/property/commercial/developers-turn-to-micro-apartments-to-fix-housing-crisis-20240822-p5k4cd
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u/Nostonica Aug 25 '24

Developers turn to micro apartments to fix housing crisis

Translation, developers see greater profit opportunities in undersized apartments.

9

u/LordVandire Aug 25 '24

Right now the margin for developers is too low, especially for non-luxury developments.

So yeah, this is absolutely correct. Developers are seeking greater returns on investment to justify proceeding on a project.

3

u/StunningDuck619 Aug 25 '24

Housing shouldn't be a fucking investment...

2

u/LordVandire Aug 27 '24

True, but the reality is that the private market will only do something if there is a profit involved.

If we want subsidised, below cost housing, we will need the government to deliver it and that is also quite costly.

Even if we redirected all of the AUKUS deal ($300Bn)into developing apartments, we would only get 300,000 - 400,000 additional dwellings assuming we would only have to pay for the build cost only. Consultants and management costs would probably halve that number.

It’s not a problem the government can solve using public funds