John McGrath – What the Census reveals about the property market
The recent Census reveals a host of information about our property market and how we are choosing to live. Here are my key observations.
Australia has one of the most concentrated populations in the world. We may live in a land of sweeping plains, but 80% of us choose to live on the East Coast in NSW, Victoria, Queensland or the Australian Capital Territory.
Overall, 67% of Australians live in one of our capital cities, but I wouldn’t be surprised to see this number fall in the next Census, given so many people are relocating to the regions these days.
I think this will be an ongoing trend. We’ve had an affordability issue in the major cities for a while now, and the prevalence of working from home has prompted many Millennials to leave the big cities and enjoy a better lifestyle on a lower mortgage in the regions.
The big lure for these young family buyers is the opportunity to buy a house, so they can give their kids the same upbringing they enjoyed with a big backyard to encourage outdoor activity and separate bedrooms for each child.
This is much more appealing than apartment living for Millennials, especially those who want to keep growing their families. Apartment living is all many young families can afford in the big capital cities, but in the regions they can buy the forever home immediately.
An apartment in Sydney – at a median price of almost $810,000 – costs more than a house in many desirable regional towns, such as the Eurobodalla and Bega council areas of the NSW South Coast.
Speaking of Millennials, there are now almost as many of them as there are Baby Boomers. Millennials are aged 25 to 39, so in the property market they are typically first and second home buyers. The Baby Boomers tend to be downsizers.
There are 5.4 million people in each cohort. The impact on the property market is that both groups are at an age where they are likely to trade properties.
Millennials with or intending to have children typically trade up to houses. Baby boomers (defined as ages 55-74) typically downsize to smaller houses or more commonly, townhouses or apartments. And not necessarily where you might expect either.
The long Australian tradition of ‘retiring to the coast’ is not the holy grail anymore for many Baby Boomers.
We see a lot of downsizers in Sydney and Melbourne buying large apartments in the CBD or surrounding inner city areas. They’re choosing a lifestyle of great restaurants, culture and entertainment at their doorstep while remaining available to look after their grandchildren.
According to the Census, almost 13% of Baby Boomers are actively involved in the care of their grandkids, which is a huge help to couples in full-time work who need that income to afford their mortgages. So, it’s unsurprising that these two groups want to live close by.
It’s no surprise to see NSW and Sydney remaining the largest state and capital city in Australia, with Victoria and Melbourne next in line. But it may be surprising to some people that the ACT has had the fastest population growth rate since 2016 at 14.4%.
Almost 60,000 people have moved to Canberra over the five years to 2021.
To outsiders, Canberra is known as a government town with lots of national museums. But there’s a lot of development going on these days, creating a new, contemporary vibe as the city becomes more sophisticated with buzzy energy akin to Washington DC.
The Census counted more than 10.8 million private homes across Australia. More than half – 5.5 million households – were couple families.
About 53% of them have children living at home and 47% of them don’t. And lone households are increasing – up by 350,000 compared to 2016. These are two key population metrics supporting the rising trend in apartment living in Australia.
There was talk during the pandemic of apartment living becoming fundamentally unappealing due to the perceived restricted space and concerns over communal facilities.
But Australia’s population trends naturally dictate that apartment living will continue to rise, even though people might be a little warier of pressing lift buttons and so forth these days.
Couples without children and people living alone tend not to want, need or have the budget for houses. We have a high percentage of both groups, so the rising trend in apartment living is here to stay, in my view.
The Census shows apartment living continued to trend up between 2016 and 2021. There’s been an 11.9% bump in the number of apartment households compared to a 10.8% rise in semis/townhouses and an 11.1% rise in houses.
Finally, the Census reveals that 31% of Australians own their homes outright, 35% have a mortgage and 30.6% rent.