Aiming to build a stronger Australian economy the Reserve Bank of Australia (RBA) has left rates on hold for another month. As a result, low-interest rates continue to encourage new home buying trends to emerge. One such trend is the growth of sustainable high-density living amidst a booming population.
Australia’s Booming Population and High-Density Living
Research suggests that Australia is growing, and fast. Over 10-years, between 2006 and 2016 Sydney added 800,000 people to its population, and Melbourne 1 million. Brisbane and Perth grew by almost 500,000 each over the same time.
But here’s the kicker: Australian housing, along with infrastructure such as amenities and transport, as well as roads are struggling to keep up. This bulge in population has taken the Australian government by surprise. After all, it was estimated the Australian population would reach 25 million by 2050. But, we’re already there.
This dilemma has resulted in the need to introduce more high-density living. In 2015, Australia passed an important milestone. This year was the first in our nation’s history where attached property dwelling construction overtook detached housing.
According to the Australian Bureau of Statistics (ABS), since 1991 apartments, flats and units, classified as high-density living, increased by 78% to over 1.2 million dwellings in the 2016 Census. Consequently, resulting in one apartment per every 5 homes.
Over the last two years, between 2016 and 2018, it’s estimated that more than 247,000 high-density dwellings reached completion. Another 155,275 are under construction.
The Affordability of High-Density Living
Population data suggests that the most densely populated area in Australia is now Melbourne. Some 45,231 people reside in a 2.4 square kilometre (sqkm) area, which equates to a density of 19,100 people per sqkm. However, apartment values in the area are still relatively low with a median of $444,000.
In 2001 though, Melbourne ranked as the 114th high-density region in Australia. In fact, data suggests that back in 2001 Sydney suburbs were listed in the top 12 highest populated areas. Median values in these areas range from $880,000 up to $1 million.
Today, the most affordable high-density living is found in Melbourne, Brisbane, Adelaide, Perth and Hobart. Median values in these areas range between $250,000 and $444,000.
As always though, when looking to buy property it’s important that you research the market. Also, consider your own financial and personal circumstances before applying for a loan. By borrowing slightly less, you’ll give yourself a financial buffer allowing you to have funds for any unexpected expenses should they arise.
Australian High-Density Living Benefits
Why buy a small home? Well, according to property experts there are many benefits. Firstly, the entry cost is far lower because the dwelling size and land that surrounds it is far more compact. Secondly, it gives home buyers an opportunity to declutter and live a minimalist lifestyle.
This is crazy: but other high-density living advantages include better heart health as studies have found that high-density living encourages physical activity, which can reduce heart disease. Many apartment complexes also come with amenities as a part of the corporate fee. These often include a gym, swimming pool and sauna, as well as a communal garden.
High-density living can reduce living costs, with less power usage, maintenance and government charges. Plus, apartment dwellers can often get rid of that costly vehicle, which attracts fuel, insurance, registration and upkeep costs.
The Australian Housing Market Big Picture
According to CoreLogic RPData, since peaking in September 2017, Australian housing market values have fallen by 2.7%. Nationally, dwelling values fell by 0.5%, with 5 out of 8 capital cities dropping in value.
Over the last 12-months, Darwin and Perth dwelling values have declined by 22.1% and 13.2% respectively. Sydney and Melbourne, on the other hand, have dropped by 6.1% and 3.4% respectively. Of course, Sydney and Melbourne make up around 60% of the housing market, so changes in these cities have a profound effect on the national housing market.
Housing market forecasts suggest that property prices in Sydney and Melbourne will continue to fall over the next 12-months. Dwelling values in Adelaide, Brisbane, Canberra and Hobart, however, will continue to increase.
Want to know the best part? For those looking to buy a high-density property, there has never been a better time. Housing prices are dropping, interest rates are low, and the market is in a period of correction. Saving for a deposit now, if you haven’t already, will enable you to break into the market before the cycle changes.
If you’re concerned about buying an off-the-plan property, then consider looking at high-density living that is nearing completion or is finished. This approach will reassure you that you’re buying a property that’s worth market value.
If you’re looking to beat a rate rise by securing a more competitive home loan, then it’s time to discuss your options with a mortgage broker. We have access to 100’s of products across a panel of multiple lenders, so we can help you find a competitive mortgage.