Cost of Living & Property Choices - July 2023
July 31, 2023 / Written by Rich Harvey
Given the rapid escalation in cost of living on household budgets, how is this impacting on people's housing choices? It seems that many people are finding it increasingly unaffordable to buy a freestanding home in their preferred suburbs where they can an easy commute to their workplace. Is this housing crisis creating a great social divide between those owning houses and those continuing in the rental pool?
As the cost of living continues to rise at a rapid pace, it is significantly influencing people's housing decisions in Australia. The increasing unaffordability of freestanding homes in preferred suburbs, coupled with the changing preferences of younger generations, has led to a surge in demand for alternative housing options. As a result, many young Australians are making rational choices, relinquishing the traditional dream of homeownership, and focusing on achieving financial independence instead. This article explores the implications of these trends, shedding light on the evolving landscape of housing preferences and the challenges of accommodating immigration projections.
The escalating cost of living is impacting individuals of all ages when it comes to deciding where to live. Affordability constraints are forcing many people to compromise on their location preferences, either by seeking alternative suburbs with lower property prices or by considering other housing options such as apartments or smaller dwellings. As a result, individuals might need to relocate to areas further away from their workplaces, which can have implications on commuting times and quality of life.
As property prices soar, younger generations, in particular, are finding it increasingly difficult to enter the housing market. Outer suburbs of Sydney and Melbourne are becoming popular hotspots for younger Aussies, particularly Gen Y (MillenniaIs), as evidenced by a natural population increase these outer suburb locations. Suburbs like Mickleham and Wollert in outer Melbourne and Schofields and Oran Park in outer Sydney are among the top ten growing suburbs in Australia, particularly for these younger generations. This highlights a preference shift among young Australians, who are seeking affordable house and land packages in these areas. Conversely, suburbs that historically experienced significant natural population growth, such as Forster, Tuncurry, and Ballina along NSW's mid-north coast, have a higher median age skewed toward Baby Boomers showcasing a contrast in generational living preferences.
Amidst the soaring cost of living and unaffordable housing prices in major capital cities, young Australians are reevaluating their dream of homeownership. Many are opting for financial independence over traditional property ownership, redirecting their resources towards investment in stocks, diversified portfolios, and entrepreneurial pursuits. This shift reflects their adaptive response to the changing housing landscape and a pursuit of sustainable wealth for the future.
Additionally, driven by the high cost of rent and housing, an alternative trend is emerging among young Australians who choose to remain in their parents' or childhood homes for longer periods. Escalating property prices make renting or purchasing homes in expensive urban areas unfeasible for many. As a result, multi-generational households are becoming more commonplace, as families come together to share living spaces and expenses. This trend not only alleviates financial strains for young Australians but also strengthens family bonds, providing them with the opportunity to save for a more stable financial future. While some opt for financial independence, others find solace in the support and cost-saving benefits of extended family living arrangements.
In line with the government's projection of welcoming around 400,000 migrants into Australia over the next year, the anticipated influx of migrants necessitates a comprehensive approach to meet their housing needs. It calls for a combination of strategies, including the development of new residential areas, expansion of existing suburbs, and the creation of vibrant, sustainable communities that cater to diverse populations. Australia needs to build an additional three million homes over the next two decades to provide the needed infrastructure to house Australia's growing population. Coupled with investing in transportation networks and the provision of essential services such as healthcare, education and recreational facilities becomes paramount to ensure quality of life for both new and existing residents.
The higher cost of living is giving rise to various housing trends across Australia. As property prices become less attainable, more people are opting for apartment living due to their relatively lower cost and convenience. Additionally, the concept of granny flats and tiny homes is gaining popularity as a means to provide affordable housing solutions while utilizing limited space efficiently. In the face of the challenges posed by the rising cost of living and unaffordable housing, young Australians are displaying resilience and adaptability in their housing choices. While some are embracing financial independence as an alternative to traditional homeownership, others find comfort in the emerging trend of multi-generational households, fostering stronger family connections and financial support. These evolving housing preferences reflect the determination of young individuals to navigate the changing landscape and create sustainable pathways towards a brighter future.
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