Beyond 2035: How many more homes, & where?

How many new dwellings does Australia need to keep pace with its growing population? What type of homes will they be, and where?

These three little questions have big implications if you’re thinking about buying a property in 2015. Knowing where and how people will live – not just today but tomorrow – is gold to any investor wanting to buy for future value growth.

Australia’s population projections

Knowing how many people are expected to call our cities home in the future will help us gauge how many homes are needed.

The latest figures produced by the Australian Bureau of Statistics forecast by 2061:

• Sydney will have about 8 million residents. In 2012 the New South Wales capital was home to about 4 million people.
• Melbourne will have about 7.6 million residents. The Victorian capital is currently home to about 4 million people.
• Perth will have experienced the strongest growth – its current population of about 1.9 million will grow to 5.5 million.
• Brisbane will post the second-strongest growth – up to 4.8 million residents from its current population of 2.2 million.
• Darwin will have about 225,000 locals, up from 131,900 in 2012.
• Adelaide is expected to grow by 600,000 residents to 1.9 million.
• Hobart is expected to grow by about 53,000 residents to 270,700.
• And the ACT – home to Australia’s capital Canberra – will almost double its size from 375,100 to 740,900 (overtaking the whole of Tasmania in 2038).

What does that mean for housing?

• How many new homes are needed by 2035 and beyond?
• Where will they need to be built?
• What type of dwellings do we want?

“By 2035 we are more than half way to 2050 and can expect Melbourne and Sydney to each have between five and six million residents,” forecasts Senior Demographer Bernard Salt, Partner of KPMG.

“In Brisbane there will be close to one million. How do we cope with that?

“Well we’ll need another 500,000 homes apiece, most on suburban edges but also more saturation in established suburbs, which means jobs will have to devolve away from city centres to five or six meta-regions – hubs – that offer jobs, a range of housing and entertainment facilities, hospitals and university campuses, located along each city’s railway lines.

“Any low-density property on rail lines will be valued by 2035 be that the Caboolture/Beenleigh lines in Brisbane, Parramatta/Blacktown/Chatswood in Sydney or Dandenong/Frankston/Box Hill in Melbourne.”

Housing Industry Association Economist Geordan Murray says it’s important to take long-range forecasts with a grain of salt, given the ABS uses “some very broad assumptions” until 2025 then uses these assumptions to make forecasts beyond 10 years.

“It is very hard to be accurate,” Murray says. “That’s why we don’t have an exact number of dwellings (that need to be built to house Australians in 2035), suffice to say it is going to have to be in proportion to the population growth.”

Murray says two factors that will influence how many homes must be built by 2035 are:

• The number of existing homes that get demolished and replaced: “And usually not one-for-one but one-for-two, one-for-five or more ratio.”
• Australians’ “real income growth” because the more money we make the more dwellings we will buy including holiday homes “or a city home for during the week and a principal home on weekends.”

Murray predicts Australian cities will more detached houses, multi-dwelling homes including townhouses and duplexes and more apartments in higher-density housing around business hubs.

“At the moment family households, which make up 71% of all households, demand detached dwellings more than any other type of dwelling but that will change over time as they will see more value in small homes and medium density housing.

“There is a lot of evidence that the baby boomer cohort do not really want to leave their family homes or if they do move they want to stay in their local areas, which of course raises issues for local town planning around enabling infill development to create more small homes to meet this demand from people who will only downsize to somewhere nearby.”

What will future homes look like?

CEO of the Planning Institute of Australia, Kirsty Kelly thinks the key question is “what form will these dwellings take”.

“It does need to be far more diverse (than the status quo),” she says.

“It won’t be the traditional three or four-bedroom house on a quarter-acre block but far more variety to reflect the changing family structures including migrant families, multi-generational families and single-person households including single parents.”

Kelly says future homes will need to be close to future infrastructure including jobs, public transport, shopping, schools and parks.

“The location of this infrastructure will determine where these new dwellings are required.

“In our older established suburbs, as residents retire, we must ask ‘how do we unlock that suburban potential’ and the answer is not just ‘build more apartments or build more suburbs’ because we must always be mindful of affordability. And while new houses in a new suburb may be more affordable to buy, the costs involved in travelling hours to and from work can be prohibitively expensive.”

Housing in 2035 and beyond may see more:

• Resident co-ops: “where residents in a community collaboratively take control of changing the character of their own street/s,” Kelly says.
• Smaller smarter homes: “Design will play a big role in the future because if you design a space well, you can get a lot of amenity from a smaller space and if thinking long-term, good design is more cost-efficient due to energy savings.”

Article Courtesy of www.realestate.com.au