Author:

Greville Pabst, CEO, WBP Property Group

Residential housing in Australia is under increasing pressure as our country’s population surges to more than 22.3 million.

According to the ABS, Australia is one of the fastest growing countries in the developed world with a growth rate of 2.1 percent, which resulted in an increase of almost half a million people in the year to September 2009.

But increasing demand from a growing population is but one factor creating strain on supply with the issue further exacerbated by changes in household demographics and lifestyle trends that show an increase in the number of single person households.

While floor plan sizes have risen significantly during the last 20 years, estimates suggesting more than 30%, research shows that household sizes have declined. Making way for a new modus operandi as the needs and habits of our population change, the historical tradition of larger households and McMansions is quickly becoming a thing of the past, leading to the emergence of changes in Australia’s housing landscapes.

Attracted by the access, the aspect, the lifestyle and the convenience afforded by location, Australia’s population is largely concentrated around its capital cities. Notably, ABS figures report that in the year to June 2008 Melbourne accounted for 81% of Victoria’s total population growth. This distribution of the state’s populace, while at the centre of the strength of Melbourne’s residential property market which outperformed all other capital cities in 2009, is unsustainable.

With values on the rise buyers are being priced out of the market, forced to purchase property further from Melbourne’s centre. While many argue the solution to the housing crisis is simply to build more houses to subdue the enormous demand, the problem is far more complex.

Though demand for new land in suburban fringe areas is high there remains the need for adequate infrastructure to service new estate communities in order to make them viable options for their residents, many of which work in inner Melbourne. However, complex planning laws governing the speed of development and of urban sprawl are delaying infrastructure progression and are important factors contributing to current issues of affordability and housing supply.

Consequently, we are witnessing a shift away from traditionally dominant houses to higher density dwellings such as apartments, units and townhouses. A more affordable option and often better located, units and apartments have risen steadily during the last 18 months and according to REIV showed a 2 percent increase in March to $450,000.

As property values continue to climb and the supply of affordable land declines we will witness a change in Australia’s housing landscape in years to come.

This article was published in the Saturday Herald Sun 1st May 2010.