Demography is destiny
Changes to the population profile have big implications on the pattern of housing demand. Indeed, Australia’s population growth is driving strong demand for student housing, affordable first homes, downsized apartments and senior living.
They grey wave
What is particularly interesting is the move by impending retirees in their 50s and 60s from large empty-nester houses into smaller and more suitable apartments. Population ageing will drive a big downsizer movement over the coming years.
Unlocking real wealth
The downsizing movement is partly driven by lifestyle reasons, but also by strong financial incentives. For many households, their home is their biggest asset, and their biggest source of wealth creation. For many, retirement is a prime liquidity window.
Downsizing for dollars
In moving from larger houses to smaller apartments, even in a similar location, households can unlock sizeable pools of equity from their long-held illiquid asset. This price gap is particularly large in major capital cities like Sydney.
The upmarket downsizers
The sharp end of this adjustment is much narrower in scope, with a keen focus on older, wealthier suburbs, where there is a more substantial price gap (and arbitrage opportunity) between older, larger houses and smaller, amenity-laden apartments.
The real opportunity ahead
For real estate developers, there are specific buyer preferences to keep in mind. Location is vital – it is important to be near to existing family and friends. Product is key – given an increased focus on quality, amenity and accessibility.
