As Australia’s population continues to climb, a number of economic, cultural and demographic trends are set to significantly transform the property landscape for buyers and sellers, new research has revealed.
According to the first of the Commonwealth Bank’s Future Home Insights Series, the evolving Aussie lifestyle will see several factors emerge that will considerably influence the Australian housing market over the next 15 years.
“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,” CBA senior economist and author of the report, Michael Workman, said.
“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.”
The report stated that 30 million people will be living in Australia by 2030, up from approximately 24 million today.
According to Mr Workman, this means that an additional 2.7 million homes will be needed to accommodate the population over the next 15 years, and new construction activity levels will need to be upheld as a higher headcount could potentially put upward pressure on house prices.
CBA also found that 89 per cent of Australians currently live in metropolitan areas, ahead of the US (81 per cent), UK (82 per cent), Germany (75 per cent) and China (54 per cent).
Mr Workman said the urbanisation rate will continue to have a significant impact on residential property value.
“High demand for metropolitan living drives prices up in our cities, which means that housing in regional areas is often more affordable by comparison,” he said.
CBA also found the number of multi-unit dwellings is on the rise.
“Australian houses are still among the largest in the world but the average floor area of new dwellings has contracted by 0.7 per cent between 2004 to 2013,” Mr Workman said.
“Multi-unit dwelling construction is a major driver of the current construction cycle, half of new dwelling investment in this segment, well above the 30 per cent long-term average.
“Smaller homes are more energy efficient and cheaper to heat and cool. Growing popularity of apartments, townhouses and semi-attached dwellings may see a positive impact on both the environment and household budgets,” he said.
Also on the rise are one-person households, which Mr Workman noted is a result of more Australians deciding to marry later, live longer and because divorce has become more common.
“This trend is likely to have a significant impact on the housing market, with smaller apartments and houses configured to suit the lone resident becoming more common,” he added.
Another trend likely to impact the housing market is that one in five Australians will be over the age of 65 by 2030 – an increase from 3.6 million to 5.7 million and the largest increase out of any age group.
According to Mr Workman, an ageing population may fuel demand for accommodation that will support a stimulating lifestyle.
“Factors such as easy access to quality health care, public transport and safety, will influence housing demand and supply,” he said.
The report also found Australians are expected to spend $32 billion on alterations and additions in 2016 alone.
An increased interest in home renovations means Australians may be more willing than ever to buy a property that can be improved, which could consequently influence the price of un-renovated dwellings, Mr Workman said.
Lastly, the bank revealed 70 per cent of Australia’s gross domestic product now comes from the services sector.
As a result, future homes will need to cater for a “mobile and digitally-focused workforce, particularly as more companies introduce remote and flexible work arrangements”, Mr Workman said.