Overall, the market for apartments seems to be supply constrained. The main factors:
1. Government approval is required to build large apartment buildings. In general, this seems to lag behind demand.
2. Large buildings take a long time to build
3. There have been a number of years of high immigration, especially in and around the CBD.
All of these factors combine to cause high prices. In a high price environment, many residents are stretched for cash. They essentially have to pick the lowest price apartment available. It's not uncommon to have multiple people sharing a room in order to decrease costs. This creates a high price floor. Mid range apartments don't tend to be much more expensive, simply because many residents are already super stretched financially and unable to afford the extra marginal cost.
As a property developer in a high floor, low marginal payoff environment your financial incentive is now to build as many low cost apartments as possible.
>> The majority of Victoria’s newest apartments are so small they would be considered unliveable in Sydney…More than three-quarters of new one-bedroom apartments built across the state are 50 square metres or less, which means they probably would have been illegal in Sydney, London and Adelaide. [1]
Making these apartments meet a reasonable minimum standard could only be less than 5% of the total cost [1]. To achieve this governments have tried to intervene by increasing minimum standards [2].
What concerns me the most is the longer term impacts. When demand drops off (as covid is pointing to), you have a massive supply of low quality apartments. Is the end result of this many vacancies and people living in shoe boxes when they could've been somewhere nicer?
There are a few long bows there, but as someone who lives in a relatively sunny but not quite sunny enough apartment that is my take.
[1] - https://blogs.crikey.com.au/theurbanist/2015/05/18/apartment... (great blog for planning issues)
[2] - https://architectureau.com/articles/victorias-draft-apartmen...
I have less experience in the high end of the market, as it's firmly out of my price range. Perhaps that alone is the answer? If while earning ~2x median pay, I don't consider staying somewhere more livable it would suggest prohibitively high prices. I'm unsure if the price is dictated more by the aforementioned undersupply or the higher quality. It probably reveals something about inequality in society.
I can't be certain the motivations of the developers choosing to build smaller apartments, the reasons I alluded to in the parent comment were an attempt at an educated guess. There is however an obvious ground truth that apartment sizes are shrinking (47m2 2014/44m2 2015 for 1 bedroom -10% in one year!) [1]
- [1] https://www.afr.com/property/melbourne-new-apartment-sizes-s...
The difficulty that I see is that housing prices in America are so high that it's unrealistic for moth people to create enough value to purchase a residence at even that basic level of quality.
I'm not convinced that these are values worth respecting.
A house or a place to live? There's not enough physical land adjacent to places of business for each person who wants one to own a single-family home. They're an awfully inefficient use of space -- see the entire western half of San Francisco.
> This cannot happen while also respecting the idea of properties as investments...
Property can't be affordable and a good investment. Those two are mutually exclusive. An investment goes up relative to inflation. Affordability by definition goes down relative to inflation. You can't have something that goes up as it goes down.
> ...the wealthy wanting to be able to purchase disproportionately large places in multiple desirable locations...
You can, if you do something along the lines of what Singapore does with the HDB. Some 90% of Singaporeans live in government homes built by the HDB, and the remaining 10% is available to the wealthy to play.
> ...and the idea that so many people may desire to live in a city that the city cannot possibly take them all.
They city can absolutely take them all if you allow building up. There's no excuse for down-town San Francisco north of market limiting buildings to 6 stories when downtown Hong Kong has 118 story buildings.
I'm not sure this is that important a criterion for most people. Pre-lockdown, I'd leave the house before the sun came up, and got home barely in time to catch the sunset. If I wanted sunlight, I could walk a block in either direction.
I actually have a preference for living in shadier (as in shade, not crime) parts of town, especially neighborhoods with tree-lined streets/boulevards.
Out of curiosity, what is your reasoning behind this belief?
[1] At least until we arrive at some sort of Star Trek level of technology, no society is going to do this perfectly, so when I say "functioning society" I mean one that more or less provides for the vast majority of its citizens and provides some sort of safety net/second chance for people who do fall through the cracks.
[2] This is much more "wishy washy" and hard to quantify, but I'd say that in a functioning society everyone would be able to, in a general sense, live the sort of life that they want while providing for themselves and their family. I mean this in broad strokes such as wanting to live in a cosmopolitan city/near the beach/near mountains or wanting to be able to seriously practice art/music/sports (although not necessarily as one's day job).
Invest in public transportation (and potentially restrict private transportation in city centers) so that we can expand how far out someone can live and still have a reasonable commute.
Where appropriate, allow people to work from home so that commute is less of an issue.
Build more and in some cases higher density affordable housing so that more people are able to live in desirable areas.
Invest in infrastructure (both practical infrastructure such as high speed internet and "aesthetic" infrastructure such as parks and public works of art) in order to make more places desirable.
This is the sort of thing that markets solve really well. If you want a dwelling unit with those properties, pay for it. If they're less important to you than cost, don't. If one is $300,000 and the other $600,000, it's very reasonable to choose affordability and go to a park.