Population Growth and Housing Transformation
Australia’s dynamic landscape has been shaped by a myriad of factors, and one of the most significant contributors is the federal government’s ‘Big Australia’ immigration policy. With a population growth of 7.6 million people in the 21st century alone, the consequences of this policy are reshaping the way Australians live, particularly in major cities.
In this blog post, we delve into the intriguing trajectory of Australia’s housing market, exploring the shifts from detached housing to apartment living and examining the potential future scenarios for property owners.
Australian Dream: The Detached House Preference
Australia’s population is set to surge by approximately 40 million people over the next 40 years, driven by a sustained high net overseas migration of 235,000 individuals annually. This massive influx has prompted a rapid move away from detached housing toward apartment living, especially in fully developed cities like Sydney and Melbourne.
Sydney's Shift from Houses to Apartments
A post-2016 Census modeling by the Urban Taskforce projected a dramatic transformation in Sydney’s housing composition by 2057. In 2016, 55% of Sydneysiders lived in detached houses, but this is expected to decrease to only 25% by 2057. Meanwhile, the share of people living in apartments will double from 25% to 50% over the same period.
This shift signifies a significant departure from the traditional Australian dream of a detached house with a backyard.
The Widening Gap: House and Apartment Prices
Despite the changing landscape, it is important to note that the overwhelming majority of Australians express a preference for detached houses with backyards over townhouses or apartments. A Westpac poll during the pandemic revealed that 77% of Australians yearn for the quintessential house with a backyard. This public sentiment aligns with market trends that indicate a widening price gap between houses and apartments.
Data from CoreLogic has shown a substantial increase in the price gap between houses and apartments, particularly in larger cities like Sydney and Melbourne. The premium on detached houses in Sydney has risen from 35% to 67%, while Melbourne’s premium has increased from 37% to 54.6%. This trend, according to Eliza Owen, Head of Australian Research, reflects a long-term shift in cultural and structural trends, emphasizing the enduring value of detached houses.
Quality Concerns in Apartment Construction
Apart from cultural preferences, concerns around apartment build quality and flammable cladding have played a role in the growing distaste for apartment living. Westpac Senior Economist Matthew Hassan highlights the impact of these concerns on the housing market, emphasizing the increasing value of detached houses and land compared to units over time.
Socioeconomic Implications of Housing Accessibility
As the federal government’s mass immigration policy continues to shape the landscape, questions arise about the future accessibility of detached houses. The potential scenario where only the wealthy can afford such housing raises concerns about inequality in the housing market and prompts reflection on the kind of future Australians want for their children.
Conclusion
Navigating Change with Elepay
The evolving landscape of Australia’s housing market paints a complex picture of change and uncertainty. As we navigate these transformations, it becomes increasingly clear that, with Elepay as a trusted partner, property owners gain access to funding in an easy and accessible manner. In the face of demographic shifts, changing preferences, and market dynamics, Elepay stands as a beacon, dedicated to empowering Australian property owners during these challenging years.
While the future remains uncertain, Elepay’s commitment to providing support and financial accessibility ensures that property owners can face the evolving housing market with confidence and resilience.
