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Population Growth To Arrest The ‘McMansion’ Syndrome

population growthMid-sized, medium to high density dwellings are likely to be ideal investments today. Investing in Mcmansions may not be a sound idea anymore, says George Raptis in an article for the Property Update.

Australia has had a great penchant for those really big homes. In terms of square metres of living space, we are on top, ahead of the USA- yes the USA.

Highly indulgent average home sizes

Think about this data- Average home size in NSW is 262.9 square metres. This is three and half times the average home size in UK (76 square metres). Whoosh! Some statistic this is.

10% spike in last decade

Raptis argues that there has been a 10% addition in home acreage over the last decade or so. Presently, the Aussie average is 214 square metres, which is far from ideal use of space. It may not augur well for property investments in his opinion. Why?

How will we accommodate our growing population?

For one, the population upsurge will only intensify the housing pressure, necessitating construction of a lot more homes. Now, Australia is not going to get any bigger geographically so I am safe to assume that big homes (to the tune of 260 square metres) will only minimise the total number of dwellings. So how are we planning to accommodate the extra population?

Investor mantra for present and future

What should investors do? They should ideally invest in properties which are good in terms of capital growth and continue to rally well in long term too. Raptis provides the missing link between the problem and the solution, suggesting investors to put their money in “small, medium to high density dwellings around the inner city and transport hubs”.

Investors will also do well to study the rental yield of their property location. This will only help them pocket more rental money.

You can read Raptis’s article here.

Population growth may occur due to five reasons:

  1. Overseas migration
  2. Interstate migration
  3. Birth rate
  4. Lower mortality rate
  5. Higher life expectancy

What cannot be cured must be endured may be a wrong philosophy to adapt here and Raptis rightly points out that we will have to be really prudent in constructing our future dwellings.

Not only will the investors have to show keenness towards smaller homes but the state legislations will also have to focus more on small-sized and mid-sized housing approvals.

Do you think 100,000 new homes will be enough to accommodate Sydney’s population 20 years from now (Urban Taskforce prediction)?