Australians opting for urban apartments over suburban homes
Australians show preference for urban apartments over houses, writes Peta Tomlinson
Australians are less inclined towards the big backyard these days, preferring the convenience and lower maintenance of inner-city apartment living.
According to Professor Graeme Hugo, director of the Australian Population and Migration Research Centre at the University of Adelaide, this trending "escape to the city" is a new phenomenon. And it's being driven by the very demographic that once idealised the Australian dream of home ownership.
For the generation known as the baby boomers, those born after the second world war, it was a rite of passage to start their married life on a big block of land in the suburbs. Now, with their children having left home, they're opting for an inner-city lifestyle - and they can afford it, leveraging years of price growth in the family home.
Baby boomers are a powerful economic force, accounting for one-quarter of Australia's total population and one-third of its workforce, Hugo says. Unlike the present-day young professional couples, who may live in the inner city for a few years before moving out to the suburbs when their children arrive, baby boomers are more likely to stay put for 20 or 30 years.
This puts pressure on apartment supply - a situation which is unlikely to change, Hugo says, given that the momentum towards higher-density living keeps building. Add to that the hundreds of thousands of overseas students who also want inner-city accommodation, and demand escalates.
But that doesn't necessarily mean that high-rise shoeboxes are on the cards, according to Hugo. "At the moment, [the shift] we are seeing is predominantly lifestyle-driven," he says, suggesting a preference for medium-density apartment blocks which retain some green space. "One thing we do know is that it is changing."
David Rees, regional director and head of research and consulting for JLL Australia, agreed that the country is witnessing a housing shift. Baby boomers downsizing is one contributing factor, he said, but younger couples are also having fewer children these days.
Rees was one of four expert panellists discussing Australia's housing shortage at the Bloomberg Economic Summit in Sydney last month. "Smaller households are looking for different kinds of accommodation," he said.
Investors are also fuelling demand. This comes from foreign nationals who buy apartments for their student children to live in, eyeing rental yield or capital gain down the track, and Australians heading back into property after disappointing stock market returns since the global financial crisis.
"On the supply side, a number of strategies are being implemented to control suburban sprawl," Rees said. "Planning rules are changing to encourage more medium-density high-rises in areas that were traditionally quarter-acre blocks."
Even so, there is "no systematic evidence of oversupply", according to Rees. "Vacancy rates are low, and rental growth, until recently, has been quite strong." Indeed, JLL research points to a shortfall of 43,400 dwellings in Sydney alone. The idea that somehow Australia's housing market looks risky "has to be viewed with some caution", Rees said. "There is still a fundamental undersupply."
This shift towards inner-city living was also noted by Reserve Bank of Australia's (RBA) head of financial stability, Luci Ellis, who, during a speech in May, described the nation's inner areas as "job magnets", attracting more people in recent years. Slowly, she said, Australia's cities "are taking on a more internationally typical form", with more apartments and medium-density zoning.
Another panellist at the Bloomberg summit was Iwan Sunito, CEO of Crown International Holdings Group (Crown Group), a Sydney-based Australian property development and investment company.
Sunito said what was seen in Australia was in line with global trends. "People are increasingly downsizing, driving demand for apartments." He cited a World Health Organisation prediction that by 2050, 75 per cent of the world's population would live in cities, up from 54 per cent this year and 34 per cent in 1960.
Sunito also saw demand for resort-style living within the apartment sector. Australians still wanted the big pool and the nice garden - only they didn't care to maintain it, he said.
Crown Group recently announced a new A$250 million (HK$1.7 billion) residential and commercial project, Crown Sydney, to be built in the heart of Sydney at 161 Clarence Street. Thousands of inquiries from around the globe have been submitted for the 25-storey tower since registrations of interest opened in March, according to Sunito. The project will be launched internationally on November 22.
"A global population shift to cities is increasingly evident in Sydney as popularity soars for centrally-located apartments," Sunito said. "There's a change in lifestyle preferences of young and old, towards low maintenance living, close to shops, education, transport and jobs."