Demand for apartments could slow in favour of houses as the 20 to 34-year-old segment of the population move onto the next stage of their lives, according to new research by BIS Shrapnel.
The age bracket, which it labels the ‘echo baby boomers’, has been driving apartment occupancy for the last 10 years, according to its Emerging Trends in Residential Market Demand report.
At the same time, it found there has not been any major evidence of an increase in the rate of downsizing by those aged 65 and over.
The age-bracket has been over-represented in demographic make-up of Australia as the children of the baby boomer generation grow up while overseas migration is strong in that age bracket.
“The growth in the 20-to-34 year old group has fuelled occupancy of units and apartments in the inner and middle suburbs of the capital cities over the past decade, mainly as renters,” says BIS Shrapnel senior manager Angie Zigomanis.
“However, as this group increasingly moves into their late 30s and early 40s in the coming decade and enters their next life stage, the question is whether they will still live in medium and high density dwellings.”
According to the 2011 Census, around 63% of households with a household head aged 20 to 34 years old lived in detached houses, but this figure is 80% for households where the household head is aged 35 to 49.
And 71% of households among 35 to 49 year olds were families with children, compared with only 39% of 20 to 34-year-old households.
“Assuming the current 20 to 34 year olds in multi-unit dwellings move on to separate houses, as has already been evident among 35 to 49-year-old households, then this will translate to higher demand for new detached houses,” says Zigomanis.
“This would provide some relief for land developers, builders and building materials suppliers who mainly service the detached house market and have found the going tough in recent years – although the challenge will be for all stakeholders to ensure that the greenfield land market will be able to meet this potential increase in demand.”
But BIS Shrapnel does propose an alternative future where apartment dwellers grow to like living in apartments and don’t move on to houses, thereby increasing the average age of those living in apartments.
This would drive demand for apartments appropriate for family with young and growing children, offering more space, both indoor and some outdoor, or located adjacent to public outdoor spaces.
“It could also trigger greater renovation activity as the emerging 35 to 49 year olds who still want a house purchase in established areas and tailor the house to their needs,” Zigomanis says.
BIS Shrapnel says this alternative theory is currently online likely in New South Wales where households have much a higher propensity to live in townhouses, units and apartments.
In Queensland, Western Australia, and South Australia the demand for apartments won’t be as strong, while the jury is still out on Victoria.
This article first appeared on Property Observer.
Comments