Demographics and Gentrification Trends
When you invest in a property, the idea is to prefigure how enticing it will be to the tenants of the prevailing market and if it will satisfy the requirements of hordes of investors and owner-occupiers if you need to sell it over a short term. While there is no denying the trend, it may not be wise to overlook the present tendency of buyers to hold out long. The only concern they have is whether their asset will register a decent inflation-adjusted capital growth when it is finally time to sell. In this context, the word demographics will be heard of a lot more in the years to come.
Study of demographics
Collective social urges are changing. Past generations considered someone who did not get married by the 25th year as some sort of an oddity. Today, people get married a lot later. In fact, in the United States, there has been a lot of talk about the extremely low marriage rate figures for women (62.7 per 1000) and this, about a couple of generations ago, would have seemed ludicrous.
A century ago, each house had 4.5 members. Contrast it against the average household size of 2.5 members today. Imagine a place like Sydney where approximately 40% of households have no more than one person in it. The demographic trends have a lot to say, and if you add these figures to the gentrification trend (our affinity towards urban living), you will get a picture of how our property buying decision-making needs to evolve.
More and more of us are getting drawn to the café lifestyle of the CBD area and its easy-to-commute routes and mode of transportation. It needs little mention that the facilities and amenities available to people across ages is also quite laudable in the urban areas. This is perhaps one of the top reasons why we started departing from our affinity towards McMansions in the far-off suburbs. Our traditional love for really big homes (we are second to none in terms of square metre space that our homes occupy on average- ahead of the USA, think!) notwithstanding, we have clearly made the shift to small homes near the urban main-draws.
Gold dusts of the future
So think again…..people are fast urbanising (gentrification) and households are getting smaller (demographics). So won’t you like to invest in a relatively smaller property in the CBD area and hold it for something like two decades? Because of harsh natural boundaries, the Australian property market cannot expand much further. And with the population exploding the way it does, such properties are only likely to become gold dusts in the future.