The first of the Commonwealth Bank’s Future Home Insights Series has been published and the results - and the way in which they will influence the Australian property market - make for very interesting reading!
According to the report, Australia’s population is predicted to swell to 30 million people; one in five Australians will be over the age of 65, and the number of one-person households is on the rise.
Senior Economist Michael Workman said that over the longer term, a number of economic, cultural and demographic trends are emerging that may significantly influence the Australian housing market.
“Commonwealth Bank has identified the major trends shaping Australia’s housing market by 2030 to assist home buyers understand how the property market is evolving over time,” he said.
Future market trends
“Whether you are looking to buy your first home, or make a new investment purchase, understanding future market trends can help you make a more informed decision about where, what and when to buy.”
Much of how Australia’s housing market and lifestyles are evolving is affected by massive growth in population numbers. It's estimated that 30 million people will live in Australia by 2030 - that’s up from approximately 24 million today.
Industry research estimates that another 2.7 million homes will be needed over the next 15 years to accommodate the population. As an increasing population is one factor which can put upward pressure on house prices, the CBA report highlights the importance of new construction keeping pace with population growth.
Metropolitan areas growing
Surprisingly perhaps, Australia is one of the more urbanised countries in the world, ahead of the United States (81 per cent), United Kingdom (82 per cent), Germany (75 per cent) and China (54 per cent). And 89 per cent of Australians live in metropolitan areas.
The urbanisation rate has a major impact on residential property value, with the high demand for metropolitan living pushing up prices in the cities. By comparison, this makes housing in regional areas more affordable.
We know multi-unit dwellings on the rise, and there's another interesting observation in the report, too. While Australian houses are still amongst the biggest in the world, the average floor area of new dwellings shrunk by 0.7 per cent between 2004 and 2013.
Multi-unit dwelling construction is a major driver of the current construction cycle, approximately half of new dwelling investment, which is well above the 30 per cent long-term average. Much of the reasoning behind this, is that smaller homes are more energy efficient, as they are cheaper to heat and cool.
An obvious advantage of all this is that the growing popularity of apartments, townhouses and smaller homes will have a positive effect on the environment.
The fastest growing group - which may surprise you is - is one-person households, due to the fact that more Australians are marrying later and living longer, and divorce is more common. This trend, too, will push the demand for smaller apartments and houses.
Commonwealth Bank’s Future Home Insights Series confirmed that one in five Australians will be over the age of 65 by 2030 - that’s an increase from 3.6 million to 5.7 million in just 15 years, and represents the largest increase in any age group.
Every age group has particular housing needs, and an ageing population is likely to seek accommodation close to quality health care and public transport.