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With Australians downsizing ‘to the final box’, the next generation of home buyers will be able to take up housing stock, demographer Simon Kuestenmacher said.
Speaking with The Adviser, co-founder and director of The Demographics Group, Simon Kuestenmacher, has said mortgage and finance brokers will “have their hands full” by the 2030s as the ageing population ‘frees up’ high-demand two to three-bedroom homes.
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It’s the great Australian dream to own your own home, thus it’s no wonder older Australians tend to want to stay — right to the end of their lives — which is playing a part in little housing stock supply in outer suburbs and regional areas, Mr Kuestenmacher explained.
At the same time Millennials “after procrastinating for so long” are seeking those two and three-bedroom dwellings after reaching the family stage of their lives, which is increasing demand, he said.
“We seem to be at a bit of a tipping point reached and it just happened to coincide with the pandemic,” Mr Kuestenmacher said.
The last three, four years, we had the Millennial generation (‘the biggest generation in Australia by far) reach the family formation stage of the life cycle.
“That means all of a sudden, the small, probably rented hipster apartment in the inner suburbs of Surry Hills of Fitzroy Brunswick got a bit too small because we had 1.7 kids,” Mr Kuestenmacher said.
“This desire to live in a large home now has gone up like crazy and this will be with us for another 12–13 years,” he said, because that’s how many Millennials are left in our inner cities.”
Thus, demand for housing remains rife and will only continue to grow. But as housing stock dwindles and property prices rise, Millennials remain in limbo.
Notwithstanding recent falls in property prices, Australia’s property market has skyrocketed in recent years.
Domain’s latest housing affordability report showed that Sydney ranked as the country’s most expensive capital city per square metre followed by Melbourne.
While Millennials look to leave the metro areas that they can’t afford, they seek middle suburbs to suburbia, but housing stock remains low, Mr Kuestenmacher explained.
He explained ‘empty-nester Baby Boomers’ were reluctant to downsize and often ‘blocked’ development opportunities for new housing developments.
“That means there is no stock available in middle suburbs … so [they will] jump the middle suburbs and go to the urban fringe and go to the regional lifestyle towns,” he said.
But with an ageing population, the next generation of home buyers is expected to take up the new estate sale, expected to come on the market by 2030.
“Mortgage brokers really will have their hands full in the 2030s and 40s,” Mr Kuestenmacher explained.
“They will be faced with the big task of actually servicing all the potential jobs that they have at hand because in the 2030s, a Baby Boomer generation will finally downsize either because the family home becomes a physical hazard and loosens to manage or because they do the ultimate downsizing of dying.
“That means you have this big, massive amount of Baby Boomer properties or in really lucrative middle suburbs entering the market at scale throughout the 2030s and 40s.
“The property behaviour of the biggest generation over the next decade-plus is super predictable, so we know exactly what’s going to happen.”
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