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Deliberative Development and the 'Uberisation' of Housing Markets

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The Australian apartment market is inefficient, characterised by its inability to effectively meet owner-occupier demand in an orderly and sustainable manner.

Despite urban consolidation policies by Australian governments at all levels, new apartment supply has not placed the necessary downwards pressure on housing prices. The housing market is irrational, “far less rational than [even] the stock market”, and the market will not simply self-correct if restrictions to supply are lifted – as if a dearth of supply is the principal cause of Australia’s housing affordability crisis.

Enter deliberative development – coined by Andrea Sharam of RMIT – the “deliberative” development model, and the financial barriers to entry that prevent it from succeeding, may provide an answer to housing affordability.

Approximately 80 per cent of apartments are built for investors, which is usually reflected in the poor quality design and sustainability of apartment buildings littered around Australian cities.

According to recent research by Sharam, digital disruption offers an innovative opportunity to address Australia’s housing affordability issues through the use of market design theory and two-sided matching markets.

Sharam’s research looks into the disruptive models of development ("uberisation") that can potentially revolutionise the traditional apartment delivery model in Australia, leading to improved housing affordability.

Flipping the current development model on its head, deliberative development allows occupants the opportunity to be involved in the design of their housing from the outset, increasing competition and promoting a more responsive attitude towards consumer needs.

Architect-led development that results in high-quality, sustainable housing is already taking place in Melbourne under the not-for-profit Nightingale model, which has achieved incredible success (the waitlist was so significant they had to select buyers by ballot) – the nightingale model is also scaleable.

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Nightingale - 6 Florence Street, Brunswick

According to Sharam, declining housing affordability has not been resolved by the regular reset of urban growth boundaries, the provision of new greenfield land and a surge of high rise residential tower construction in capital city centres.

This market failure results in under-supply, over-supply and supply limited to certain locations – the development of a product that is unnecessarily expensive and undesirable to owner-occupiers, and especially families.

With the exception of the luxury end of the market, supply is insensitive to the demands of would be owner-occupiers – most apartment product is generic, poorly designed, poor quality and located primarily in inner city locations.  

To counteract this market failure, Sharam proposes market design theory, which provides an innovative approach to understanding the supply of housing, and offers a practical solution to promote affordable apartment supply.  

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Sharam's research hypothesises that "uberisation" or the application of market design is an emerging disruptor to the apartment development market that can overcome longstanding market failures in the supply of apartment product and the productive densification of our cities.

The housing market is markedly inefficient, and as we've seen in the tech industry - where inefficiencies exist, there are always opportunities for disruption.


Dr Andrea Sharam is the senior lecturer at the School of Property, Construction and Project Management at RMIT in Melbourne.

Dr Sharam will be delivering a keynote presentation at Urbanity '17.
Click here for more information and to register for tickets. Be quick to make sure you don't miss out!

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Article originally posted at: https://theurbandeveloper.com/articles/uberisation-housing-markets-deliberative-development