Here are my seven most important urban trends:
- Increasing in household size. More people are living in blended households. The now defunct baby bonus was taken up with gusto, so lots more kids in our population mix and migrants to Australia are generally young adults, with an average age of around 30 years, so they have or want kids, too. Plus, the mix from overseas has changed, with more migrants now coming from those countries with large family units.
- Polarisation of demographics. An increase in those living alone or as a couple, plus an increase in blended households as noted above – coupled with a drop in what many still think is the standard Aussie household, mum and dad and 2.5 kids. The proportion of those living alone or as a couple over 60 years of age will have increased too, especially women over 60 years; sadly, most with limited financial means.
- Casualisation of the workforce. Many more will be working a range of casual or part-time jobs than the regular ABS labour force data series suggests. As part of this trend, more oldies will be working than in previous generations. Most are doing so, because they have to, financially, rather than because they want something to do. The promoted image of Australian retirement is a happy couple walking along a beach at dawn or dusk, whilst the real picture is weathered hands counting coins.
- Limited wage growth. Very little real change in household income over the past ten years, with falls in real average household income in recent years. Increasing share of material stuff for the top 10% of wealthy households; a contraction in the size of the ‘middle class’ and a large increase in the number of Australians in struggle street. Nearly all households will have taken on more debt.
- Fewer moves. Blame stamp duties; lack of new full-time work; oldies needing to work to help fund retirement or low housing affordability, but our current count is likely to see a very low number of moves in coming years. Tenants are also staying put longer.
- Maximising available space. Tenants are not only staying longer but they are subleasing space in order to afford the rent. Owner residents are also now turning to the likes of Airbnb to help cover the mortgage. Others are now renting out homes that were once locked up or used occasionally. This trend towards utilising our spare bedrooms or even homes – despite the recent rise in off-plan overseas buying (and the penchant of Chinese towards locking up assets) – we believe, is on the increase.
- Lower home ownership. Less home ownership for those in the typical first home buyer age group; even falls in home ownership rates for those in their 40s and even 50s. About two out of five households now rent, up from 30% only ten years ago. In the coming decade, one out of two Australian households could opt to rent, not buy.
So what does this mean when it comes to housing?
- Less new houses will be needed than many think.
- Dwellings need to accommodate sharing – either by tenants and/or blended families.
- Fewer sales than in the past. Biggest falls expected in investment selling.
- Being close to work or being conveniently located near major transport routes will become paramount.
- Many will be forced to compromise on their housing choice.
- Limited price and rental growth, if not real falls in both.
- More tenants per dwelling, but with increasingly limited money available for rent.
- Fewer property investors – as the easy gains are now largely gone. A drop in the number of households holding just one property and an increase in the number of investors with multiple holdings.
- Residential returns based more on yield and manufactured growth, via redevelopment or maximising existing space.
Not being heard, yet
This new world is currently not being supported by the mainstream.
Our banks, building industry, valuation process – and especially governance (and in particular local government/town planning) – is holding back much needed housing reforms.
Mum and dad, without wanting to sound too derogatory, want these housing changes. Whenever I give a public market outlook presentation and the time comes to outline what’s really happening out there, most of the ‘mum and dads’ in the audience nod in agreement.
When it comes to question time, the majority want to know how they can redevelop their home to assist with their retirement and age in place. Few seem truly interested in moving into a new build. They are too expensive and/or poorly designed/built. More would move if the product did the right things.