A nation of empty playgrounds

[MichaelW]

Hi Guys,

If this pans out as predicted, then the impact on property investing will be huge. Of particular interest is the point:

Today's suburban castles will be tomorrow's white elephants as families shrink and the aged population swells.

Banks are already thinking ahead to who will buy the McMansions when empty nesters downsize. The smaller families of the future won't need the five-bedroom, three-bathroom, double-garage house that is sought after today. That's good news for people sitting on investment units - they'll be hot property by 2050. "The oversupply of inner-city apartments we've got now will be an advantage - they'll be the desired destination of the future," Chris Richardson, director of Access Economics, says.

Property prices will mirror the demographic shift. "House prices won't collapse, but within house prices there will be a shift towards apartments," Richardson says. Prices for big houses will be based on land value, rather than the bricks and mortar.

"The value of McMansions on the edge of town won't be for the property as a lifestyle, but for the amount of subdivision you can get," Salt says.

But the big suburban family home won't disappear entirely. They could be retained by some families as a status symbol. Others may become home to groups of older single people living together in a quasi-family set-up.

Full article:
http://www.smh.com.au/articles/2005/04/10/1113071854508.html

Cheers,
Michael.

 

[luckyone]

I don't know about that. I mean, my husband and I live in a 4 bedroom, ensuite, double garage home and there's only the two of us. Of course, it couldn't really be classed as a mansion as it's only 17 squares, but it's still pretty big for 2 people.

I imagine in the future there will still be plenty of others, like us, that just like having some space in a house.

 

[geoffw]

Even without kids, I'd like a place which is not too close to the neighbours. I'd still like a place where I can turn up the music once in a while- or have a decent argument

Units or duplexes generally can't offer that.

 

[alexlee]

This assumes that the population doesn't grow, though, right? If there is some decent immigration of young people from overseas, it'll create demand for housing.

 

[tomd]

I suppose we can't easily dismiss the opinions of the likes of Richardson and Salt, but lots of retired people do live in large houses. I've thought of retiring to a unit which would be good for views and being handy to beach/facilities, but I think I would still like to live in a house with a garden and a bedroom, an office, a storage room, a guest room ....

Houses with one bedroom downstairs and the rest upstairs are probably not a bad idea.

Also, I've read articles in the papers that say that many people are not attracted to units over houses and that large houses are popular because of the longer period many children are spending at home to save money.

But my 2 IPs are lowset 3 bedders on smallish blocks!

Regards

 

[see_change]

It's also assuming the kids want to leave home....

See Change

 

[MichaelW]

Hmmm,

Does make you think though. If you're pursuing a long term buy and hold strategy, and the fundamental demographics are changing, then what's done well in the past may not necessarily be what does well in the future.

I wouldn't mind living in a flash 2-3 bed inner city apartment myself except then I couldn't have my dog, which is a major drawback. And, now we're having kids the house and land is far more appealing, but the point is that we're the exception to that rule it seems.

Cheers,
Michael.

 

[Twitch]

Are 1960 built units in demand today more or less than a typical 1960 sized block of land in the suburbs (forget the house)? I think I'll take that 1/4 acre block thanks!

 

[pete_w]

we have trouble predicting the weather more than three days in advance. its interesting in a way, but i dont really think anyone can begin to guess what things will be like in 40 - 50 years.

 

[marc1]

Making a prediction for 2050 is a bit ... hum...overstretching it don't you think? If then one finishes his article with "Australia will remain the lucky country then the author lost me entirely.

We don't live in isolation and the number of migrants and refugees that come to the bigger cities every day is a reminder of that. This week as we speak, two chartered plains with about 500 people from Liberia will arrive Sydney. They have an average family of 6 some have 12 kids.

2050 ... hum... I remember when I was a kid and my geography teacher would tell us as a matter of fact that in the year 2000 there would be no more cars but personal transporters with antigravity machines, that people wouldn't need to work and that food would be free.... yet she did leave out the potential flying capacity of swine for some reason.

PS
Baby boomers have set the trends for 50 years and will do it again. Pity no one knows in which way when it comes to real estate. It is too simplistic to predict based on a few isolated parameters like "People will sell off and go up the coast", or "People will sell and buy small apartment in the city"..."People will sell and buy farms". ..."Big houses will be a liability and small will be high value" etc

My prediction: "Lots of people will sell .... and lots of other people will buy" How about that?

 

[Sailesh Channan]

This argument has been successfully used by project marketers to sell thousands of appartments. Currently you will find that approximatey 80% or more appartments are owned by investors.

While I acknowledge that such a scenario may eventuate but 2050 is a long time from now and we need to create wealth and duplicate in the current market conditions. By the year 2050 the forum members would have acquired enough properties by then and possibly moved on to higher income producing assets.

If you are thinking long term however, now is a great time to purchase properties with development potential which can be developed to provide suitable housing for the ageing population as the current stock of appartments may be unsuitable.

Another important point to consider is to provide housing that suits the lifestyles at the time. Thirty years ago is was common to see a family of 5 people living in a tiny 3 bedroom house while today a family of 4 will live in a 5 bedroom house with a rumpus and family room.

Modern appartments will also need to grow in size and smart developers are realising this already as more owner occupiers see this as a viable living option. The appartment of the future will need to address issues such as extra storage areas, larger bedrooms, useable balconys and larger living areas. Currently there are a large number of second grade appartments that will suffer once buyers attention focuses on livability of appartments as retirees are highly discerning.

 

[geoffw]

It may also be the case that, as many people retire who really can't afford to retire, that lower cost accommodation will come into demand.

This has been happening to a small extent when retirees move out of expensive capital cities to cheaper country locations or interstate- but this may not be an option for many.

 

[XBenX]

Currently you will find that approximatey 80% or more appartments are owned by investors.

Where is that info from?

 

[Sailesh Channan]

Where is that info from?

A few years ago I spent a fair bit of time researching appartment ownership and historical price growth over a 20 year period using RP Data.

This was an approximate figure in the Inner Brisbane.

I have seen this figure elsewhere as well???

 

[Aceyducey]

This is a topic I've mentioned a couple of times in the past in the forum.

I also see many of the 'McMansions' (or 'Grass Castles' as I call them) becoming difficult prospects to sell for decent capital returns in the future.

A key indicator is what the Housing Commissions are doing. They are selling many of their 4 bedroom houses and replacing with 2-3 bedroom places - because the rental demand isn't there for the larger houses.

However it's also true that people are living in larger and larger houses with fewer and fewer people. I don't regard this as such a reliable trend however, at some point diminishing returns kicks in or trends change and everyone is looking for a small low maintenance 2 bedroom place close to the city.....

My money is on the larger houses falling out of favour at some point...when that point is, who can say.

As a real example, we live in a former 7 bedroom house that we've converted into a 4 bedroom place with assorted utility rooms. It's worth more with four bedrooms than it is with 7 because there is a larger market of people looking for this size house.

As household sizes shrink, it could be that 3 bedroom houses become more valuable than 4 bedroom ones (which is when we throw up a wall, separate the electricals and heating and make the place into a 3 bedroom house and a 2 bedroom unit as a dual-occ).

But as to the abandoned playgrounds - I don't think so! Councils are hard at work ripping out the playgrounds because the insurance is too costly....so there will just be abandoned parks

Cheers,

Aceyducey

 

[The Y-man]

...

But as to the abandoned playgrounds - I don't think so! Councils are hard at work ripping out the playgrounds because the insurance is too costly....so there will just be abandoned parks

Hmm.... or was it that all the kids got poisoned from the treated timber?

Cheers,

The Y-man

 

[XBenX]

A few years ago I spent a fair bit of time researching appartment ownership and historical price growth over a 20 year period using RP Data.

This was an approximate figure in the Inner Brisbane.

I have seen this figure elsewhere as well???

Excellent, you might need to put that you were talking about a micro market in your original post, it had me confused.

 

[geoffw]

Councils are hard at work ripping out the playgrounds because the insurance is too costly....so there will just be abandoned parks

... not abandonded parks- potential development sites. Queanbeyan Council, for instance, was canvassing the selling off of some parks last year.

 

[Lplate]

My 2c worth in haste..

Are they assuming that business will continue to be conducted in big buildings in the cbd? That assumption could prove incorrect.

IMHO there is a likelihood of inner city slums with druggies, prostitutes, gangs and other nasties ruling the night. Few parks - where would the land come from anyhow?

It is already dangerous (and dirty) walking the City streets after 6.00 pm.

Psychologists have a lot to say about the oppressive feelings of isolation, alienation and threat endured by people in highly populated cities. How does one develop a sense of community in a place with thousands of isolates living in cells? Everyone looks down as they pass so they don't become involved.

No, I don't think one could bet on apartments in the inner city being a desired location for people with money to spend.

On the other hand a lot of bigger houses in the 'burbs are well located - views of lakes, water, greenery etc. I think I'd prefer a McMansion with the jetty and access to Moreton Bay than an apartment in Brisbane City. Take the fast rail in and scarper out just as quickly at the end of day.

 

[Sailesh Channan]

Excellent, you might need to put that you were talking about a micro market in your original post, it had me confused.

According to the last census data 74.6% of all occupied units were covered by a rental bond followed by 31.6% for townhouses and 16% for houses.

This was a snapshot of Brisbane. I know it does not represent all of Australia but I am sure the figures in other states will be along the same lines.