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  • Profile photo of DerekDerek
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    @derek
    Join Date: 2004
    Post Count: 3,544

    Caught this in the Australian – an article by Bernard Salt.

    Derek
    [email protected]
    http://www.pis.theinvestorsclub.com.au
    0409 882 958

    Cities scenario: Honey, I shrank the household
    Bernard Salt
    September 29, 2005

    IN March this year I was asked by the Property Council of Australia to prepare a report that projected the demand for housing in Australia’s largest cities over the first three decades of the 21st century.

    My report, delivered in June, was promptly converted by the PCA into a publication Australia on the Move, which was released to the national media.

    Australia on the Move is an important document for anyone involved in the property industry.

    It provides an estimate of the demand for housing in the nation’s 41 largest cities between 2001 and 2031. Put simply, it shows where the residential development market was, is and will be.

    The estimates of dwelling demand are derived from a combination of official population forecasts and from my own assessment of future changes in the average household size.

    But I think the real value of the report is that it contains separate estimates of the average household size for large Australian cities to 2031.

    This document provides an assessment of the future demand for both attached and detached dwellings in Sydney, as well as in places like Bathurst.

    If you are a builder, developer, financier or a bulky-goods retailer considering what markets to “play in” over the next decade and beyond, then this outlook is a must-read.

    There are two factors that mostly shape the demand for housing in any city.

    The first is population growth and the second is any change in the average household size.

    There can be strong demand for new houses in towns where the population is static, or even declining, as a consequence of household shrinkage.

    Divorce, separation, the rise of singledom and the proliferation of dink and gay couple households is good news for those in the business of building and selling dwellings.

    The 41 cities covered in Australia on the Move range from Dubbo, with a population of 36,000 to Sydney, with 4.2 million residents.

    The average household size ranged from 2.37 persons per dwelling in Hervey Bay in 2001 to 2.87 persons in places like Sydney, Bunbury, and Dubbo.

    By 2031 Sydney is expected to contain 5.2 million residents. However, by that time the average household in Sydney will have shrunk to 2.52 persons.

    These two forecasts, as well as a modest allowance for the replacement of obsolescent stock, combine to show that Sydney will require the development of 882,000 dwellings between 2001 and 2031. This is the largest single market for residential property in any Australian city.

    But this outlook would be modified if Sydney’s rate of population growth were to ramp up or down from the forecast. About 1.1 million net extra residents over 30 years for Sydney translates into a modest flat average of 36,000 a year.

    Sydney added 34,000 people in the year to June 2004. If Sydney were to maintain its current trajectory then this city would need to find space for 882,000 dwellings over three decades.

    Other large markets for new dwellings comprise the leading capital cities.

    Melbourne will require 786,000 dwellings over the 30 years to 2031, Brisbane 528,000, Perth 425,000 and Adelaide 150,000.

    If your property business requires volume then these are the residential markets to be in over the next 25 years.

    However, if you have limited resources and you need to select one “geography” to focus on, then the largest market is not necessarily Sydney.

    The demand for new dwellings in the southeast Queensland cities of Brisbane, the Gold Coast, and the Sunshine Coast equates to 893,000 over 30 years to 2031, (just) making this region Australia’s largest market for housing.

    On the other hand you might be interested in identifying a small market that is expected to grow rapidly.

    The logic is that in this environment there is likely to be less competition from major players, who tend to need critical mass to support their method of operation.

    The best market for new dwellings by this criteria is Western Australia’s Mandurah. This city, defined as also including the neighbouring shire of Murray, is expected to require 66,000 new dwellings over the 30 years to 2031 making it Australia’s 10th largest market in absolute terms.

    But here’s the deal. The population of Mandurah-Murray is expected to lift from 60,000 in 2001 to 188,000 in 2031, requiring a 223 per cent increase in the number of dwellings. Mandurah is expected to treble in population and dwellings in the first three decades of the 21st century.

    Other “shock cities” comprise similar lifestyle towns. Hervey Bay will require a 194 per cent increase in dwellings between 2001 and 2031.

    Over the same timeframe the requirement for dwellings on the Sunshine Coast will lift by 149 per cent, in Gold Coast by 112 per cent, and in Cairns by 102 per cent.

    But not all of the cities requiring complete housing makeovers can be described as “lifestyle” or seachange.

    The Queensland city of Gladstone is very much a working town based on power generation and mining.

    Gladstone’s population is expected to double over the 30 years to 2031 and yet its demand for housing will increase by 123 per cent, or more than double. The reason is that the culture of Gladstone is changing rapidly.

    In 1981 the average household in Gladstone contained 4.06 persons making it a “traditional family” stronghold among the 41 largest cities in Australia. Only the “young” and Cyclone Tracy-affected city of Darwin exceeded this household density, with 4.18 persons per dwelling.

    Over the following 20 years Gladstone households shed 1 1/4 residents, whereas the average diminution across Australia was half-a-resident. To the locals, it must have seemed that the very social fabric of Gladstone was disintegrating during the 1980s.

    And so from a very high base, Gladstone’s average household size has pulled closer to the Australian average.

    Here is a community that has been invaded by new residents with new relationships and new values.

    This process changed Gladstone and set it on a trajectory that requires fewer family homes and more units and apartments.

    It is this process, combined with strong population growth driven by industrial development, that has placed plain-Jane Gladstone in the company of “lifestyle glitterati” cities such as Hervey Bay and Mandurah.

    This prompts the question of whether there are other plain-Jane towns with strong commitments to traditional family values, that are just ripe for social and housing change.

    These towns are likely to have more than three persons per household as well as a rising economic base. I will identify these “towns in transition” in a future column.

    Bernard Salt heads KPMG’s property advisory services

    [email protected]

    Profile photo of bruhambruham
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    @bruham
    Join Date: 2003
    Post Count: 189

    Derek,
    Thankyou for your effort in copying the report.
    I don’t read the Australian newspaper so I missed that article.

    I down loaded it for future reference.
    A pleasure reading it.
    Again, thanks.

    bruham.

    Profile photo of wilandelwilandel
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    @wilandel
    Join Date: 2003
    Post Count: 761

    I agree with Bruham…

    Derek, thanks for posting this article from Bernard Salt.
    Just what I wanted to hear![biggrin][biggrin]

    Regards,
    Del

    http://www.nzpropertytogo.com

    Profile photo of redwingredwing
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    @redwing
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    Post Count: 2,733

    See Bernard thinks WA people have had it too good for too long [biggrin]

    He reckons we were kidding ourselves thinking we could always have cheap housing a stones throw from the beach, when its damn expensive elswhere..

    REDWING

    “Money is a currency, like electricity and it requires momentum to make it Effective”
    Count The Currency With This Online Positive Cashflow Calculator

    Profile photo of wealth4life.comwealth4life.com
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    @wealth4life.com
    Join Date: 2003
    Post Count: 1,248

    thanks mate good read – its like a roller coaster ride the housing market.

    So how much will a 4 bed housebe worth in your city 25 years from now – or will people be living in caravans?

    Phil

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