The property market moves quickly, with new data every week, every month, and every quarter - and then there are predictions two years into the future about where it’s heading.
But before we get tangled in the weeds of crystal ball-gazing, it’s a good idea to step back and look at the factors that influence the property market in the first place.
Finance brokerage and property advisory founder Bushy Martin pointed out that property should be assessed over the long-term, and each property market moves through “a gradually increasing ‘S’ curve cycle”.
There’s been much coverage on the falling house prices across the nation, with the sharpest drops in Sydney and Melbourne in particular, but this has to be put into perspective, Martin said.
“While Australian property values have dropped 5.6 per cent nationally over the last 12 months, this correction is both normal and expected when considered over the longer term.”
CoreLogic figures show national property values have grown 19.4 per cent in the last five years and are actually up nearly 200 per cent in the last 20 years, he pointed out.
“It is clear that property will continue to be the best investment you can make, even when performance has its variations from time to time.”
So what are the trends that will influence the Australian property market across the next decade?
Population is expected to ease slightly, but even moderate annual growth will see 340,000 new people living in Australia.
It’s the equivalent of a new Tasmania added to our capital cities every 1.5 years, according to Martin.
Households have been shrinking – from 4.5 people a household 100 years ago to 2.6 today – which will significantly push up demand.
“According to CEDA estimates, 1.7 million extra homes will be needed in the next 10 years with a substantial concentration in New South Wales and Victoria,” said Martin.
Life expectancy is increasing, and along with it the pressure for housing numbers and housing type. By 2055, Australians are expected to live into their mid-90s.
Sydney and Melbourne property prices rise for first time since 2017
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“The internet age and a transitioning workforce will see a much greater demand for flexible ‘work from home’ arrangements and an evolution of the home office,” said Martin.
We’ll see fully self-sufficient automated homes with flexible, multi-use spaces that are reminiscent of traditional Japanese homes with wall partitions that can change size and shape quickly depending on the kind of space that’s needed.
In response to growing populations and smaller-sized living spaces, IKEA is already inventing robotic furniture that can see one room be a bedroom, a living room, a wardrobe, or a study area.
The property can’s and can’t’s
In the future, we’ll see two groups emerge occupying different types of housing – which Martin calls the ‘can’s and the can’ts’ – depending on their proximity to lifestyle hubs close to high-skilled, sustainable jobs.
“Can’s are likely to be looking for low maintenance, fully self-sufficient homes on larger land with a sense of space where they can live, work and play remotely.” It’s not unlikely these homes would be equipped with voice-activated personal assistants thanks to artificial intelligence.
“Cant’s will more likely be lifetime renters and see a focus on large, multi-generational family homes that accommodate grandparents, parents and adult children for longer, or alternatively smaller, vertical apartment style mixed use communities.”
Technology is making work more flexible than ever, and it’ll mean people will be looking for properties in the locations offering the best lifestyles, Martin pointed out.
“This will further polarise living locations with a gravitation to Cityscapers (café culture, entertainment focus), Seachangers (sun and water adventurers) and Treechangers (nature, space and tranquillity) depending on the budget.”
Martin predicts the average national housing growth rate of 6.8 per cent over the last 25 years will continue – and that’s a conservative estimate, he said. It means a property worth half a million today could be worth $965,000 in a decade.
“The Australian property market will continue to grow strongly in scarce, high demand areas over the next decade.
“To be successful you just need to ensure you are buying at the right time of the cycle in that location.”
As prices bottom out in pricier suburbs and cities, now is the time to buy property if you can afford to, Martin urged.
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