By Martin North, cross-posted from the Digital Finance Analytics Blog
DFA’s latest household surveys are in, and we have updated our demand modelling accordingly. Overall participation in the property market continues to fall. But today, specially, we are looking at the prospective purchase of new property by segment and type. Demand is strongest from investors and down traders.
First we look at the proportion of households who are not property active. We see a continued rise in the proportion of households who are renting, living with relatives, or have other temporary living arrangements. We correct this data for population growth over time.
Next we look at the household population who are property active, using our standard segmentation models. Here are the segment definitions.
We then can assess the household distribution across these segments. We see an increasing number of Want-to-Buys, people who aspire to access the market, but for some reason cannot at the moment. Investors are well represented, and the Down-Traders are still active. There is a slight rise in households investing through superannuation.
We then asked in our surveys about their purchasing plans. Around 15% of households said they are considering buying a newly build property sometime within the next three years. We segmented these households by the geographic area in which they thought they might buy.
Most Want-to-Buys are looking on the urban fringe. Down Traders are likely to buy closer in to the city. First Time Buyers are also considering buying closer in, but many are being forced out to the far flung urban edge developments. These are national statistics, I won’t go into the state variations here.
Finally, we overlaid their preferences and expectations concerning the type of property they might purchase. We see a strong demand for units, mainly driven by the Want-To-Buys and Investors. Interestingly though a significant proportion of Down Traders are also considering an apartment, making a convenience and life-style choice. Demand for different property types vary across the geographic areas.
This indicates a significant shift towards high-density living, whether in apartments or in high density residential developments and sub-divisions. We highlighted recently how unit construction was moving ahead of house construction.
“This continues to represent a significant shift in the nature of housing in Australia, with a greater proportion of both owner occupied and investment property being built as multiple units, rather than stand alone houses. We already highlighted the fact that more first time buyers are buying units, and that the average plot size is shrinking fast. The shift in life-style that increased high-rise and medium/high density housing will have on households should be considered, as we are seeing the consequence of chronically high house prices working though to the detriment of many.”
