Household trends are moving towards more single-person households, whilst technology experts predict the ‘share economy’ will move beyond AirBNB into vehicle sharing in the next decade. So how will these trends influence Australian property markets?
Driverless automobiles, electric cars and vehicle sharing: these are all trends in the auto industry that are expected to be the norm in as little as 10 years. Younger generations won’t be as attached to the idea of owning mod-cons like cars, and instead, they’ll be more comfortable with the idea of renting a ‘share’ in a vehicle.
The same goes with homes, with predictions that Australians will become a society of long-term renters.
These are just some of the many trends that have the potential to influence the way we, as a society, live (and where we want to live) which is essential knowledge for property investors.
Future-proof your investment
When investors buy a property today, they should be thinking about what the market will look in 10 years’ time, to ensure their investment value is maximized when they sell.
Although, it’s hard to know exactly what Australian property markets will look like in the future, you can leverage data and information to give you some insights into where we’re heading.
Here’s what we know so far:
Apartment living is increasing
With our capital cities becoming ever more congested, more people will live in apartments and townhouses in the coming decade. This is driven by shifting demographics, our aging population, affordability constraints and limited land supply for housing. At the same time, supply of these apartments has hit record highs. The densification of our capital cities is still lagging behind the rest of the western world, so we can expect the trend to continue for some time.
Share economy is growing
In an age where the share economy is growing, with sites like AirBNB transforming the short-term letting space, landlords should prepare for the impact that this might have. For instance, it is a growing trend amongst landlords to sub-let their property on AirBNB rather than seeking long term leases. Already, rent affordability in Barcelona, a major tourist destination, is severely affected by this phenomenon. Also, what happens if your tenant decides to sub-let your property on AirBNB? Addressing such scenarios in your lease could be a smart way forward.
Property markets are fragmenting
While Sydney has always been the most expensive property market in Australia, in the last five years a chasm has been created between Sydney and the rest of the country. Over the next decade, it is likely that this huge gap between Sydney (and to a lesser extent Melbourne) and the other capital cities and major regional areas will continue to widen.
More lone-person households
Data from the Australian Bureau of Statistics shows that the number of households in Australia is projected to increase from 8.4m in 2011 to around 12.7m in 2036. The number of lone person households is projected to increase by between 61% and 65%.
In summary: the way we live is changing at a fundamental level, and it’s those investors who look ahead who will benefit the most. By preparing your investment strategy now so that your properties suit the needs of future tenants, you can create a sustainable portfolio that delivers continued profits well into the future.