Australian Analysts Sells Oranges as Apples

Re: http://www.businessspectator.com.au/bs.nsf/Article/House-price-to-income-ratios-pd20090421-RAV6W?OpenDocument

Christopher Joye of Australia's Business Spectator blog objects to comparisons of international house price indexes in his zeal to deny that Australian house prices are over-valued. He goes on to use what he refers to as an OECD international comparison of “house price to income” ratio. In so doing, he violates his own dictum.

That is just the beginning. What Joye calls a “house price to income” ratio is no such thing. As the OECD source document indicates (Reference: http://titania.sourceoecd.org/upload/1208051etemp.pdf, Table 1.2), the cited index measures the latest level “price-to-income ratio” relative to the “long-term average,” and that in comparison to the United States. This is not remotely the same thing as a price-to-income ratio, such as the Median Multiple (median house price divided by the median household income), which we use in the Demographia International Housing Affordability Survey. Calling something an apple does not make it an orange.


Canada Residential Study: Greenhouse Gas Omissions

Suburban Housing More GHG Intensive?

Researchers at the University of Toronto estimated differences in GHG emissions between a typical low density detached house in the suburbs and a 15-story high rise apartment or condominium building in the central city. The study covered the impact of GHG emissions from “embodied energy” in the construction materials and day to day operations. The conclusion was that, on a per capita basis, the detached house produced 75% higher GHG emissions than the high-rise unit. Conversely, measured on a square footage basis, the detached house produced 6% less in GHG emissions than the high-rise unit. This research does not include energy used in construction.

All of the Difference is in House Size

The differences in house size were substantial, with the detached house being approximately 2,600 square feet and the high rise unit less than approximately 825 square feet. The square footage per capita in the detached house was approximately double that of the high-rise unit. Again, the apparent differences in energy consumption are a function of the size of the house. To achieve the apparent energy savings would require households to “downsize” their living space and standards of living.

Study Excludes Common Energy

Again, more importantly, the Canadian government data source cited in this research does not include common energy consumption, as in the case of the US RCES (See Below: Common Energy Consumption), which would be typical for a high-rise building. Thus, based upon the Sydney research (below), it is possible that the much smaller high-rise apartment produces more GHG emissions per capita than the detached house.

Common Energy Consumption

Residential energy surveys often fail to allocate common energy usage to housing units in multi-unit buildings, especially high-rise condominium or apartment buildings. Common energy includes living unit and building usage that that does not appear on energy bills, but rather is charged to buildings and included, in rents, mortgages or management fees.

According to the Sydney Water study, common energy consumption includes:

• Lighting (exterior, lobbies, stairs, hallways, parking lots)
• Elevators
• Centralized hot water supply including circulation pumps
• Centralized heating and air conditioning.
• Parking lot ventilation
• Common exhaust fans
• Pool and spa areas (including water heating, pumps, heating, ventilation, air conditional and lighting)
• Saunas
• Cooling tower pumps and fans

The Sydney Water research cited indicates that common energy consumption in multi-family buildings exceeds the amount used per capita in single family residences.

Research covering residential buildings in Sydney indicated that GHG emissions per capita are higher in multi-unit condominium buildings (high-rise, mid-rise and low-rise) than in single family detached or townhouses (attached houses). Unlike the US and Canadian data cited above, the Sydney study includes common energy use, which is shown to equal approximately two-thirds of direct household consumption in high rise condominium buildings (Box: Common Energy Consumption). These estimates do not include GHG emissions from construction of buildings or the embodied energy in building materials (Figure 1).

The Sydney research, which includes both energy on residential bills and common energy, indicates that lower density housing (detached and townhouses) tends to have less in GHG emission that multi-unit housing, both low rise and high rise.


Residences: Missing data on common energy consumption makes it impossible to draw any reliable conclusions on GHG emissions based upon residential building type from the Canadian research. Even with the incomplete data, the energy consumption advantages reported for the US and Canadian multiple-unit housing simply reflects smaller housing unit sizes. On the other hand, the Australian research, which includes common energy consumption, indicates that multiple unit buildings have greater GHG emissions per capita than the lower density detached houses and townhouses. The Canadian findings on embodied energy and the Sydney findings on common energy consumption suggest that, generally, high rise condominium living produces more in GHG emissions than single-family suburban residences.

There are, however, research gaps. There is only incomplete information on embodied energy in construction materials and virtually no information on the GHG emissions produced in constructing the various kinds of housing. Any definitive research would need to include these issues.

Additional Discussion on Common Energy


Publication Announcement Demographia World Urban Areas & Population Projections

This 5th comprehensive edition includes:

• Ranking of the largest world urban areas (over 2,000,000 population).

• Population, urban land area and density estimates for all 763 identified urban areas with more than 500,000 population, comprising 49 percent of the world urban population.

• Population, urban land area and density estimates for 1,370 urban areas of all sizes, comprising 53 percent of the world urban population.

• Population projections for the world’s largest urban areas in 2025 & 2030 (over 2,000,000 population).

• Summary of United Nations world population projections and summary by gross domestic product, purchasing power parity (from 4th Edition)

• Charts on urban density and prosperity (from 2nd Edition)

• Documentation

Demographia World Urban Areas & Population Projections: 5th Comprehensive Edition