Are we building the right stuff?

 Michael Matusik, Thurs 30 October 2014

I believe that demographics, eventually, shape everything.  And whilst there is a demand for more compact housing, the want to live on top of each other (and the ability to afford the premium to do so) is at odds with Australia’s future demographic shape – and more importantly, what our key buying groups want & can afford.Let’s start from the topWe break the housing demographic market into six distinct buyer segments:

  • Young renters
  • First home buyers
  • Upgraders
  • Downsizers
  • Retirees
  • Aged care

Children, when it comes to housing need, are captured in older segments.

The first chart below shows the relative size (by no. of residents) within each key demographic segment within Australia today.

But it is the change in household formation that best determines future housing need, as shown by our second chart below.

Our second chart suggests that over the next ten years, there will be a need to build more homes for first home buyers; people downsizing & retirees.Annual housing need for young renters is projected to decline (and so, I have to ask who is actually going to rent out all those little inner city boxes?), as too is the demand for upgrader housing.  So the need for those new, big suburban homes should also wane.Housing required for aged care – for now – is likely to remain steady.Working out how many new homes are needed (and what and where these new homes should be), is more than just dividing the annual projected total population growth by the average number of residents per dwelling.What we like to do is work out what is happening in each of the six distinct buying segments.  This provides us with a guide as to the real underlying need for new homes (remember, it is about household formation & not just population growth), and a better understanding as to what homes are actually wanted.Let me demonstrate this by using first home buyers & those looking to downsize, as examples.A bit more about first home buyers

  • 35 to 44 years
  • 3.3 people per household
  • 36% no children at home
  • 30% couples or living alone (lucky buggers!)
  • A projected 20% of total new housing demand over next decade

Brief description: HECS; partnering later; parents as friends; travel; options galore – so it is not until their mid-30s to-early 40s that many buy their 1st home.

Important housing considerations: room to grow; affordability & property improvement

Preferred housing options: some apartments (inner city); some townhouses/duplexes & small houses (middle suburbs); larger detached & dual-income homes (outer suburbs)

What most buy: a property that can be improved & is capable of taking in a tenant/s to help pay the mortgage

And what about downsizers?

  • 60 to 74 years
  • 2.1 people per household
  • 92% no children at home
  • 71% couples or living alone
  • A projected 32% of total new housing demand over next decade

Brief description: As their title suggests, many want to move into something smaller & if possible in their existing neighbourhood.

Important housing considerations: low maintenance; convenience; like-minded residents; existing location; small projects

Preferred housing options: spacious apartments (inner city); townhouses/villas & dual-income homes (middle-outer suburbs)

What most buy: well-priced, usually in smaller complexes; private; secure & with space for visitors & grandchildren

Of course, some first home buyers might buy a small downtown apartment or many might choose to continue renting; just as those looking to downsize might just decide to stay put & age in their existing home.

Some from either group might buy a large home in outer suburbia, too.

But if the right housing is provided & importantly at the right prices, then many in these two sample markets – along with those in our other four key buyer groups – would buy.  So, factoring in considerations such as housing affordability is also important.

Housing that’s really wanted

Our second graphic below outlines what we think is needed when it comes to new housing across Australia over the next ten years.

Read the full article at http://matusik.com.au/opinion/building-right-stuff/

AR Developments’ focus on this key need, speclialising in developing and building affordable townhouses in infill suburbs, such as Lindum Reserve, a 27 unit townhouse estate 17 minutes from Brisbane CBD at Wynnum West.

By | 2017-09-18T02:31:34+00:00 September 18th, 2014|Blog|