Does Size Matter?
From soaring house prices to increased energy costs, there are many factors driving the change towards a smaller sized property.
In Australia living in compact housing is becoming increasingly popular due to the demographic makeup and lifestyle expectations.
Traditionally, Australians have loved their big houses and the sizeable yard to have ‘somewhere for the kids to run around’. The ‘quarter acre’ block is strongly embedded in our culture and in previous decades was often referred to as the ‘Great Australian Dream’. Remember the multi-storey ‘McMansions’ so popular in the 90s?
Over the past 60 years, Australian homes have more than doubled in size, going from an average of around 100 square meters in 1950 to about 240 square meters today. And while we are still building some of the largest homes in the world only recently overtaken by the United States, our love of space is gradually waning driven by a whole range of economic and social factors.
Higher property prices are one of the strongest deterrents to buying big. Many, especially those living in Sydney and Melbourne are being forced to compromise on size, and are choosing apartments and semi-detached housing (terrace housing and townhouses) purely because they are being priced out of the freestanding houses out there in the market.
According to the 2016 Census, numbers of those living in separate houses declined from 76 per cent in 2011 to 73 per cent in 2016, while those living in ‘semi-detached’ housing (including flats and apartments) make up just over one-quarter of housing (26 per cent).
7 Factors Affecting Property Size
- Ageing population: As our baby-boomer generation ‘matures’, we find that one in six of us are now over 65, compared to one in seven in 2011 resulting in an increased number of downsizers. Downsizers typically avoid properties with staircases, which may become a hazard in the future, and would prefer a property size that is manageable, one that offers a ‘sense of space’ rather than space itself.
- Increase in single-person households: Latest census figures indicate one in four Australians (24 per cent) now live in single person households. The Australian Bureau of Statistics is projecting that single-person households will probably rise by at least 65 per cent in the foreseeable future.
- Higher number of renters: Around 31 per cent of all citizens now rent property as opposed to approximately 29 percent in 2011. Subsequently, rent prices have also increased with the median rent sitting at $335 a week. Fewer rooms mean more affordable rent.
- Underemployment and more part-time jobs: ABC News reported in July that Australia has the third highest proportion of part-time workers in the industrialised world with many workers being ‘underemployed’ and wanting more hours. This has an impact on mortgage size and commitment.
- Lifestyle factors: Most Gen Xers and Ys are about ‘place not space’ and increased numbers of downsizing baby boomers are favouring easy access to urban culture. Handy public transport and shorter commute times, ‘walkability to shops’, respected schools, restaurants, entertainment facilities and good infrastructure are all available in the inner city where apartments and semi-detached housing are common. We are working longer hours so being in close proximity to work is a bonus.
- Sustainable living: Larger dwellings cost more to heat and cool, and pools and gardens require increased water use. It’s not only bad for the wallet but also the environment. With utility prices increasing, this is a major factor in the decision-making process, especially for older and younger generations.
- Getting rid of the clutter: Given we are all so time-poor and ‘busy’, there is also increasingly more focus on decluttering, simplifying and streamlining our lives. Big houses require constant upkeep, cleaning, and yard work, and allow us the space for more material items in our lives.
Shortage of Quality Smaller Properties
While our housing demands may be gradually changing, what remains is the necessity for good quality properties. One of the biggest hurdles we are seeing is the fact that there is not only a housing shortage but the houses being built are actually not the ones that residents want to live in
With smaller properties, especially apartments there is always the increased risk of noise and light pollution, overshadowing and lack of individual design, which can all negatively affect market value when compared to unique free standing houses.
For both property buyers and investors, it is important to consider who your renter or future buyer may be? Or even if it will be suitable for your future needs, such as a growing family. Will it suit a uni student or a downsizer? Having your audience in mind will allow you to buy well, and result in a healthy capital growth.
Some of the essential features people look for in smaller dwellings are as follows:
- Sunlight is increasingly important – Don’t try to pass that study with no windows off as a bedroom – no one wants to sleep in that room!
- Ventilation – Being able to feel a breeze and easily access a cross draft will make your life better (and make it easier to dry clothes when it rains).
- Lay out which gives you space —or a sense of space—an open outlook complimenting a logical, open plan layout helps residents feel less boxed in.
- An internal laundry is still a must have
- A practical bathroom layout is crucial – people need to be able to easily move from the sink, shower, and toilet with ease
- Storage is always on the wish list – no matter age or circumstance people will always have ‘stuff’ to stow. If you can accommodate this in a smaller space, it will be a major bonus.
Less valuable features:
- Single use spaces which used to be a symbol of lavishness, like that dedicated dining room, will soon be a thing of the past – just like the shrimp cocktails and cakes covered with glazed, canned fruit that was set on that table.
- A spare bedroom – this will become more of a multiple use space as has been seen elsewhere in the world, e.g. furnished with a fold out couch and double as a study rather than being a dedicated visitor’s room.
While solutions to the housing affordability are many and varied, most agree that the answer does not lie in the post war quarter acre block we once believed we deserved, nor a dense mass of towering high-rise apartment blocks.
To our mind, the solution lies somewhere in between and the kind of property that will do well in the future includes multiple occupancy dwellings, such as boutique unit blocks, houses with granny flats, town houses, duplexes, terrace homes and other flexible dwellings especially in those middle-ring suburbs.
If you would like advice and assistance on buying the right property for your current needs and future capital growth, contact leading property buyer’s agency Cohen Handler now.