One of the most significant social changes in the past 30 years has been our aging population, over the coming decades this aging will polarize, affecting not only the lifestyle choices of the greying population, but the economy of successive generations as well. As Baby Boomers seek to downsize responsibility, are they biting at chunks of the property market also sought-out by Gen Y?
A decade ago a house on a quarter acre block might have been the dream lived out by the average Aussie Baby Boomer, but new research suggests they are increasingly looking at apartment living, the same corner of the market chased by their grandchildren.
Policy-makers, planners and developers need to get creative as two generations converge on the same portion of an already under-stress property market.
The Australian Bureau of Statistics – ABS – projects that population growth will see an even higher demand on housing, the converging generations – Baby Boomer vs Gen Y – has the potential to kick-start a steep rise in apartment prices unless developers start planning for seriously increased demand ::::
Demographer, Professor Graeme Hugo, director of the Australian Population and Migration Research Centre at Adelaide University, says given baby boomers make up 25 per cent of the population, policy-makers need to start taking their needs seriously and begin to plan for more high-density housing.
Professor Hugo, who has released a paper based on his study of the nation’s changing demographics between 1981 and 2011, says that while the need for health care and support services has been anticipated, suitable living arrangements have not. Australia’s population has grown from 14.6 million in 1981 to 21.5 million in 2011, and although population growth has slowed from post World War II rates, it’s remained solid by high-income country standards.
“Population change tends to be incremental, so it tends to creep up on us, there’s no sudden changes,” Professor told ABC’s Caroline Winter. “But when we compared it over 30 years, I think there really have been some quite substantial changes.”
The risk of adverse social consequences due to inadequate property supply policy and affordable housing for Australia’s growing population was a central theme of the HIA’s annual Building Better Cities Summit in July this year.
The challenges facing Australia in housing the population over the coming decades and the consequences if demand isn’t met might be catastrophic according to the industry body.
“Australia needs to build another 1.3 million homes by 2020 to meet current population projections, however, at the current rate of building we will we fall short by around 150,000dwelling.” the Summit heard.
Failure – by all levels of government – over preceding years to address the fundamental constraints to housing supply has seen residential construction experience its longest decline in post war history.
Population Growth Putting Pressure on Housing Market
Developers need to get much more creative, as folk live longer, healthier lives, demand for independence is sure to grow, shovelling the Gramps of to a retirement village is the least likely option Baby Boomers are likely to go with.
The Housing Industry Association – HIA – says ABS population projections imply strong demand for housing. Access to appropriate, affordable housing is a very important factor in maintaining the standard of living expected by the community. Throughout the last decade housing supply policy has not been given a high enough priority.
“This issue plays such an important role in the welfare of the community and our economy,” Geordan Murray, HIA economist said. “ABS projections send a clear message to policy-makers around the country. Ensuring that the supply of new housing can meet the needs of a growing population must be an urgent and ever-present policy priority.”
Even the lowest ABS projections indicate that Australia’s population will near 26 million by 2020 and close in on 30 million by 2030. “Housing people will require a considerably higher average build rate than what’s occurred over the last 20 years, that won’t happen without a concerted and cooperative focus on policy reform,” commented Geordan Murray.
Baby Boomers Pitted Against Gen Y
Analysts are spruiking up an Australian property boom in the next five years, spearheaded by Baby Boomers vs Gen Yers. And the key product?
2 and 3 bedroom apartments, close to the city, with full lifestyle services within walking distance and solid public transport. Jonathan Rivera, Associate Director at Brisbane-based property consultancy Urbis says continued recovery from the global financial crisis has seen a new trend: baby boomers pitted against Generation Y in the property market.
“I like to call it easy-as-pie, population, infrastructure and employment,” Mr Rivera said. “We’re seeing the Gen Y and Baby Boomer market hunting almost the same type of accommodation, promoting walkability, infrastructure and amenity, properties that really promote lifestyle.”
Mr Rivera says Gen Y is looking at 1 and 2-bedroom apartments while 2 and 3-bedroom properties are being sought by baby boomers looking for low-maintenance accommodation and a long-term investment.
Amusingly Gen Y’ers are being pushed to independence by parents who rather than hunting space, are driven by assisting their offspring in a more solidly grounded life-plan, something baby boomers seemed to have overlooked.
Supply is a major concern, “We still have some challenges for developers around finance and construction,” Mr Rivera said. “That’s what’s really starting to drive parts of our market, it’s not being supplied as fast as required.”
Some Boomers Moving Way-out
As well as considering a move to apartment living, more Baby Boomers are converting rural holiday homes into something more permanent, however both options bring big challenges when it comes to supply, infrastructure and market conditions.
The problem is exacerbated by Australia’s population growth – seven million over the past 30 years. Professor Hugo says the increased mobility of older Australians offers “substantial opportunities”, including inner-city living.
“Baby boomers, as they move into older age, are going to be more likely to move house than previous generations,” Professor Hugo said. “What we’re seeing is the beginnings of significant numbers of baby boomers who are downsizing and buying smaller housing within the inner and middle suburbs.”
In his paper, Professor Hugo also highlights the major capital injection baby boomers will bring to regional areas.
South Australia’s Copper Coast – an hour-and-a-half drive north of Adelaide – was one destination considered in his research.
“Half of the housing stock was holiday homes and of those three-quarters were owned by baby boomers, and when we surveyed the baby boomers themselves half of them had intentions to fully retire to their holiday home,” Professor Hugo said.
Copper Coast Mayor Paul Thomas says his council is preparing for the influx, estimating that the permanent population of 13,000 will almost double in the next 10 years.
“So we’re seeing gradually people shifting in and spending more nights here and less in the city, and I think that’s going to be ongoing – that we’ll see more and more of those people spending more and more time here and gradually relocating,” Cr Thomas told ABC’s Caroline Winter.
The mayor says that his council is just one of many across Australia in line for major growth – and its associated challenges.
“We’re going to see this boom in population and with that can bring some prosperity, but also there needs to be the approach from council that we need to be pro-active, because with this increase in population we’ll also have some challenges, particularly around planning and infrastructure and the social infrastructure this new population expects,” Cr Thomas said. “The largest increase at the moment is in those younger older age groups, when people are still very productive, still very healthy, many of them have significant assets, and it could well be that there are real opportunities – not just for their lives to be enhanced but to facilitate our economic and social development of the country.”
Professor Hugo says baby boomers still have much to offer as they age and is urging governments to keep them in mind in planning for the future. Professor Hugo’s paper was published in the Australasian Journal on Ageing.
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