Modification of the existing housing stock : a study of housing adjustments through home improvement

Abstract

In recent years, home improvement has become more important as a supplier of housing and this enhanced role in the housing market can have a significant impact on the quality of the existing housing stock, as well as on the distribution of dwellings among different households. This thesis aims to explain why and how home improvement decisions are made in order to understand the broader implications of home improving as a housing adjustment process. Other areas of concern are how improvers differ from other households, and the extent to which improving is a substitute for moving in adjusting housing consumption. The main data source of this study is a sample survey of two hundred homeowners in Adelaide, who had undertaken home improvements within the year prior to the date of interview. The Australian Bureau of Statistics also provided some useful unpublished data on additions and alterations to dwellings. Home improving mainly affects the home ownership sector of the market. Each year more homeowners improve their existing dwelling than move. The preference for improving instead of moving, among homeowners, stems largely from the high financial and psychological costs of moving. Many of them move under circumstances where they cannot improve, such as household dissolution or formation, or a change in workplace, or where they desire some housing attributes which are impractical or uneconomic to alter. The typical housing consumption pattern of many Australian homeowners over time is that~ after achieving their· objective of owning a house, most of them stay in the same house for a good number of years, and often make improvements to it as their demands change with their socioeconomic circumstances over their life cycle. Home improving enables a household to adjust its housing consumption when the need arises, and as and when it can afford to do so. Home improvements are made mainly for consumption purposes, and to meet the demand for more and better housing rather than to remedy physical deficiencies in the dwelling. The number of households purchasing older dwellings in inner suburbs for improvement is relatively small, although there is evidence that this phenomenon is continuing in Australian cities. Generally, home improvements are made by the more affluent households, although the lower income improvers are able to reduce expenditure by doing more of the work themselves. As a result, improvements tend to be concentrated among the better houses in areas of higher socio-economic status. The preference for home improving among home owners may also change the composition of ownership with new construction, particularly at the urban fringe, catering mainly for the younger and less wealthy first home buyers. If left to the working of the market, home improvement activity is likely to widen the quality differences among the existing stock and accentuate the unequal distribution of housing resources and residential segregation. On the other hand, improving the existing stock can reduce the waste of housing obsolescence and deterioration, and the rate of neighbourhood turnover which can be socially expensive. To reduce inequalities, there is a case for providing financial assistance to those who need it, but cannot afford to improve their homes. More importantly, home improvement activity tends to slow down the rate at which cheap low quality dwellings are filtered down and, as a result, fewer of them reach the poor. Hence, the government should take a more direct approach, through direct construction of public housing, or the acquisition and upgrading of existing houses for the poor to ameliorate some of the inequities resulting from home improvements.