Older Australians create more investment opportunity
First home buyers usually get the spotlight all by themselves when it comes to demographics struggling in the housing market. However, the Real Estate Institute of New South Wales (REINSW) recently expanded the net to focus on older Australians looking to downsize, as well.
REINSW President Malcolm Gunning stated the NSW government needs to provide incentives for retirees to downsize, as this will lead to more stock coming on market, widely helping the housing sector.
"The government also needs to assist older Australians who want to downsize to a property that better responds to their current circumstances. Making this attractive will also bring additional stock to market, which in turn will support first home buyers," he said.
"Introducing these incentives for first home buyers and those seeking to downsize will help the market as a whole and will assist the housing affordability issue that is faced by those looking to build a future in our great state. We urge the government to support the property market and ensure it makes the right decisions in the upcoming state budget next week (17 June 2014)."
It's important that the REINSW is bringing attention to older Australians. While it's true first home buyers could use more assistance, the ageing population in Australia is set to transform the real estate industry in coming years.
An Ageing Australia: Preparing for the Future, a research paper released by the government's productivity commission, outlined the very real changes on the horizon. In short, Australia's population will grow and become older thanks to longer life expectancy.
"Australia's population is projected to rise to around 38 million by 2060, or around 15 million more than the population in 2012," the report stated.
"Sydney and Melbourne can be expected to grow by around 3 million each over this period. The population aged 75 or more years is expected to rise by 4 million from 2012 to 2060, increasing from about 6.4 to 14.4 per cent of the population."
The report goes on to state that as of 2012, there was a person aged 100 years or older for every 100 babies. By 2060, this number is expected to jump to 25 per 100 babies.
Such shifts in demographics leave the door open for savvy investors buying investment property in Sydney and beyond to target the rapidly growing elderly population.
Investing for the future in more ways than one
Is it now time for the rise of the 3-bedder?
Data shows ageing Australians tend to live alone or as couples, pushing down the occupancy levels of houses. Furthermore, research indicates that older Aussies prefer to live in a detached house.
While plenty of people may want to stay in their own home as they age, a large percentage look to downsize.
The Australian Housing and Urban Research Institute reported in 2013 that 25 per cent of all retiree households moved over the previous five years. The majority of these moves were to a smaller property.
As the ageing population continues to grow, that 25 per cent market share will rise, as well.
Put simply, now might be the perfect time to invest in a property - such as a smaller three-bedroom home - that older Australians would be happy to downsize to.
However, even more important than home size is location and how it relates to the changing needs of an older population.
Proximity to public transport, healthcare and other amenities sought after by older people are key to creating a cash flow positive property that will attract attention from a rapidly growing demographic.