Thinly veiled Beyoncé references aside, there’s an ongoing transition happening within Australian households and it’s one that property investors would do well to take careful note of.
As a collective, we are choosing to marry later in life and interestingly, as the age of people entering into wedded bliss gets higher, so too does the amount of time people spend as tenants.
Last year, Matthew Lovering of the Australian Housing and Urban Research Institute, conducted a study that found people are not just delaying holy matrimony, but other major life events that usually accompany the cultural convention of coupledom.
And yes, that includes buying their first home.
The traditional Great Australian Dream of home ownership is seemingly no longer prominent on younger generations’ radars.
Lovering’s report shows that between 1981 and 2012, the number of 25 to 34 years olds owning or purchasing their own home dropped by almost 20 percentage points.
Further data reveals that the number of people renting increased by 78 per cent between 2005 and 2012, and there has been a notable rise in the amount of households renting for more than ten years.
Seemingly, some type of major life change – like getting married or preparing to start a family – is the necessary catalyst for a major consumer decision like buying your first home, which is grounded in our basic human need for shelter and a profound life change that signals our progression into adulthood.
The fact that we are consciously delaying these catalytic events in our lives, often in favour of a career, is directly impacting on the Australian housing landscape and causing some obvious deviations to long held property traditions.
And let’s not forget the ongoing affordability ‘hype’, adding further pressure to a housing market already in observable transition.
Then of course there’s the older generation of baby boomers, most of whom are nearing or in the midst of retirement and looking to downsize their double or single person household as their adult children become renters, leaving an ‘empty nest’ in their wake.
Both late blooming groups – the boomer downsizers and young, (officially) unattached Gen Ys, are seeking lower maintenance, smaller and more manageable dwellings, in close proximity to essential amenity like public transport and importantly, employment opportunities.
They are also all about the lifestyle, preferring to pay more for an inner city address with smaller square footage that gets them as close as possible to their prized café culture than seek similar priced, larger properties out in the ‘burbs.
What does this mean for property investors?
Well, essentially this demographic shift is being played out in our housing markets, which is reflected in an ever-increasing demand for affordable accommodation options in close proximity to our major cities.
Given that most detached dwellings in the more sought after inner urban postcodes have been priced out of the running for tenants and first home buyers alike, the next best thing is a character apartment, which can still come with entry level price tags and reasonable rates of rent.
As a property investor, knowing your market can make all the difference to acquiring assets that will perform over the long term and importantly, to sustaining a portfolio with rental properties that ensure a manageable cashflow position.
Getting the right balance of owner-occupier and tenant demand is critical to the overall success of your investment.
Remember, a little bit of demographic data goes a long way to assessing what type of property your tenants of today and homebuyers of tomorrow will most desire.