What does the future hold for property markets?

5th October 2006

Investors always need to have at least one eye on the future. For property owners, that means being on top of the demographic trends that will determine demand for housing in the years to come.

Australian Property Investor magazine reveals the key population shifts expected to affect property markets in the decades ahead.

"Demographics drive everything," said API editor Eynas Brodie. "That's why property investors who want to maximise their returns need to understand demographic and social trends in Australian society.

"Why would you add a McMansion to your portfolio if statistics tell you that households are downsizing and that future tenants will probably want to live in something smaller?"

API's research found that some of the demographic shifts likely to affect property are:

• A major increase in the number of lone person households in Australia over the next 30 years. While some predict this will create a swelling demand for one-bedroom apartments, other property watchers say properties that cater to more than one market will do better, especially as many people won't be able to afford to live alone. Therefore two-bedroom, two-bathroom apartments may be the ones to watch, as they can accommodate two couples, two singles, one couple, or one single.
• The age composition of the Australian population will undergo a dramatic shift. One result will be a much greater proportion of people aged 65 and over. However, a less publicised shift will see stronger growth in the number of people in their 20s and early 30s. The growing numbers in this age group are likely to drive rental demand, with current indications suggesting they want to live near the action and are willing - and able - to pay extra to do so.
• Following the "baby boom" and the "baby bust", there are some indications Australia is undergoing a "baby bounce", with statistics showing an upward trend in the number of babies being born in recent years. This could produce continued demand for the humble suburban home.
• The stock of public housing is falling, meaning demand for private rentals should increase.

Brodie said, "When landlords target the rental market, they should aim to hit the bullseye every time and stay one step ahead of the game. Nobody wants to be burdened with a property that's sitting empty because it doesn't meet the needs of prospective tenants.

"An investment property needs to appeal to the majority, not the minority, and that's where knowledge about changes in trends will help buyers pinpoint their investing decisions."

 

© Australian Property Investor magazine - www.apimagazine.com.au. Reproduced with permission. To subscribe to API, go to www.apimagazine.com.au or pick up a copy from your local newsagent.

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