Debbie Shankar - 1 Dec, 2015

What Does the Future Hold for Australia’s Housing Market?

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The Australian population is expected to grow considerably over the next three decades. This will lead to a number of changes in the housing market, such as cities grow larger, the density of housing increasing in order to accommodate more people and housing prices increasing further.

According to the Australian Bureau of Statistics (ABS), the Australian population currently stands at just under 24 million people. But, this is continuously growing at 1 person every 1 minute and 32 seconds, based on the current rates of births, deaths and migration. Based on this, the Australian population is expected to reach 37 million by the year 2050.

Sydney, Melbourne and Perth are expected to double in size as the Australian population grows. However, in saying this, it is anticipated that all Australian capital cities will begin to increase their housing density in order to accommodate for a rise in population.

Current Housing Density in Australia

It is estimated that Melbourne and Sydney have the highest population densities out of all Australian capital cities, with each of these capital cities having a population that exceeds 10,000 people per kilometre squared (km²). Brisbane is the third highest populated Australian city, with a density of 6,216 people per km². Perth, Adelaide, Canberra and Hobart rank equal 4th with a population density of approximately 3,000 people per km². Darwin is the least densely populated capital with a density of 2,620 people per km².

According to a recent sustainability study, while Australian cities are classified as highly livable they have environmental footprints that cannot be sustained. For instance, Sydney has a geographical area of 2,037 km² with an estimated population of 4.29 million, whereas London has a land area of just 1,575 km with a population of 10.23 million. Thus, the sheer size of Australian cities is expected to have a greater impact on the environment and will possibly cause transportation problems in the future.

Demographers suggest that there are two distinct trends that are emerging in Australian housing. The first is urban sprawl is moving to the outer areas of cities as lower density housing is being built. The second is higher density housing is being concentrated in city centres. This lack of continuity between areas and housing density is expected to lead to transportation issues later down the track. In order to combat this problem, city planning needs to address these issues now to create a more sustainable future.

What Impact Will Greater Density Have on Australian Cities?

Australian cities are basically designed to meet the needs of the ‘average citizen’ with more green spaces, walking and bike trails, and transport being implemented. This, in turn, increases the physical and mental well-being of the citizens and gives them easy access to facilities and amenities. However, studies suggest that urban sprawl promotes a reliance on vehicles, which can lead to a sedentary lifestyle and an increase in obesity.

At present, Australia does not have a megacity, where the population exceeds 10 million, which gives the Australian government a perfect opportunity to review their planning strategies for growth and development in cities, and in surround metropolitan areas, before problems really present themselves.

How are Housing Prices Expected to Increase?

Sydney and Melbourne are still the best performing residential markets in Australia. However, it is expected that Brisbane will realise higher capital growth over the next 2 to 3 years. This is attributed to the fact that Brisbane’s property continues to be affordable, whereas Sydney and Melbourne’s property is becoming too expensive for many first home buyers, and those on average incomes.

While the housing market is expected to cool over the next 3 years due to rising stock, with less investors buying property, home and unit prices will still grow. Though it is expected that home prices will outperform units in terms of capital growth. Let’s look at the data.


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