The New Australian Dream

Thursday, September 01, 2016

Owning your own four bedroom house on a decent block of land with a big backyard and outdoor swimming pool used to be the quintessential 'Great Australian Dream'. But with rising property prices and increased living costs, that dream is being redefined.

what is the Average Australian Profile?

The average full time annual income in Australia is $80,000, which is bumped up a bit because of high income earners. Even though we are living longer now than a generation ago, the average retirement age is little changed, at 61.5 years.

The cost of housing is up with average rent prices per week at $485/week and the average house price (capital city) is $765,730. In Melbourne it is well above this and in Sydney it is around $1 million. This is where the challenge is for Australians: 40 years ago the average house price was around 5 time’s average earnings and now you can see it is almost 10 times the average annual fulltime earnings.

Other than affordability, what else are Aussies looking for?

Lifestyle is key. People are opting to live in higher density areas for the sake of convenience and location- within close proximity to transport, restaurants – the café culture as it has been called. Our Urban Living Index shows a strong correlation between the most urban/densified suburbs and those with the highest liability ratings.

Australians are opting for a lifestyle of Minimalism - we are 'decluttering' our lives and putting more value on the intangibles like travel. Generation Y aren’t opting for a big home with garages to store all their stuff but more of a focus on the easy-livability of apartment living. Indeed many baby boomers are downsizing from their larger homes in the suburbs to this style of living too.

Renting, as opposed to buying, what some of the benefits?

The ability to change locations easily is well regarded – the average Australian renter stays just 1.8 years per home. Our research shows that 1 in 3 renters are actually 'choice renters' and they choose to rent for lifestyle reasons, not primarily for affordability reasons. These choice renters are twice more likely to be living in medium and high density housing than the average Australian and they are almost 10 years younger than the average Australian. The ability to upsize and downsize easily and the flexibility to travel for extended periods of time is a driver for them. ‘Rentvesting’ is also becoming a ‘thing’. This is where people choose to rent in an area they like, but buy somewhere more affordable and use this as an investment

Generation Y are struggling to attain the Great Australian Dream – are they going to be ok?

There is a challenge emerging of "generational inequity" as shown by this infographic:

Gen Y’s have the least wealth of the working generations and their proportion of Australia’s wealth is less than half their demographic share, while the Baby Boomers who are a quarter of the population, own more than half of Australia’s wealth. (More information on this topic can be found here)

This is why Gen Y is reinventing the Aussie Dream and while they do still like the idea of owning something of their own, it is not just the big home with the back yard in the suburbs. But many in this generation will be absolutely fine thanks to the massive intergenerational wealth transfer set to happen in the next 20 years as those aged over 65 transfer much of their total wealth of $2.5 trillion.

A Snapshot of Australia's Housing Market

Monday, August 01, 2016

Owning a home is the great Australian dream, but with 30% of Australians renting, could our love affair with bricks and mortar be turning sour? Our Aussie states go head to head as we compare affordability for buyers and renters.

How many Australians own their home outright and how many have a mortgage?

2 in 5 (40%) Australians are trying to own their own home and slowly pay it off, with the smallest category of all, 28%, being lucky enough to have paid off their home in full.

How do the capital cities compare when it comes to renting an apartment?

As you would expect, Sydney ranks as the most expensive city, costed at about $500 per week for your average apartment. Amazingly, Darwin is up there as well due to more more demand than supply and with not the same investment in stock. Meanwhile, if you move down to Hobart, it is almost half that, paying about $270 per week, and Adelaide not much beyond that at $370.

What if you are looking to buy a home, how much is that?

Sydney is still leading Australia by a long way with almost a $1,000,000 median house price. A distant second is Melbourne, at over $800,000. If you look down to Hobart, the median house price is $357,000, so that means using the money spent on a home in Sydney, you could buy about 3 homes in Hobart – and a pretty good lifestyle down there as well.

Looking at Australia as a whole, what is the percentage of apartments to houses?

About 3 in 4 Australians live in a detached home, so that’s traditionally been the Aussie dream. Then you have about 14% who live in apartments and 10% in townhouses. We are starting to see a change though, with a quarter of Australians now living in medium to high density housing. At the moment if you look at new housing approvals, it's 1 in 3, so it has gone up. If you look at Sydney and Melbourne, 2 in 3 new housing approvals are in medium to high density living. So we are starting to get more densified, with an increase in vertical communities compared to the more traditional horizontal ones, and that’s where we are headed in the future.

Watch Mark's full interview on The Daily Edition here

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