"Sooner or later almost all children will leave the family home, and this truth is one of the biggest drivers of demand in the housing market."
As couples have children and children grow up, housing needs change dramatically
When we look at the impact of family formation it takes no enlightenment to understand that as families grow they have very different housing needs. This is an obvious fact but one that has far-reaching impacts for project marketing, because growing families top the list of reasons as to why most people move house. Likewise at the other end of the scale, when families shrink, the impact is visibly felt.
The needs of growing families have always fuelled the growth of Australian suburbs (as they do in every developed economy), and while more people are now living in the inner city and in apartments, the suburb is still, despite an ongoing debate about its future and cost, very much alive. Today across Australia on the outskirts of many cities there are major new areas of growth, and there are also areas where large tracts of in-fill sites are being developed.
However, almost without exception governments are either failing to deliver or are unable to afford the necessary infrastructure to support this growth, it’s a time bomb that is ticking away. The cost of new infrastructure impact almost every area of the housing market and is a major impediment to improving affordability and so directly impacts how families manage their housing needs.
There are also families who are very happy living in the city where they are big users of existing community facilities like parks, recreation facilities and schools. As children age some families do not see the inevitable need for a backyard or the need to live in the suburbs. These families are happy to trade private space for quality access to public space.
For the development community and as a key marketing challenge, finding the balance across these varied needs and aspirations provides choice and diversity of projects. The recycling of former inner-city industrial areas, which are close to established facilities, is one very big trend that is obvious in our capital cities and in many regional towns. And while these areas do not always have every facility or service, the density of development and the resulting increase in population then helps to underwrite investment in services.
Sooner or later almost all children will leave the family home, and this truth is one of the biggest drivers of demand in the housing market. While it is a gradual process, the demand created and the changes it causes for everyone involved, including mum and dad, are fundamental. The impact can be very chunky, like all those baby boomer kids leaving home in the late ’60s and into the ’70s and who now own a major part of the national housing inventory.
Young adults move into a flat, they move to a shared house or they buy their own home and they form varied relationships. Whatever step they take as kids leave home, it involves a shift in the demand for housing – both in terms of type and location. As families shrink some areas with less population have services run down, but over time we also see these same areas regain popularity and the cycle continues, and these are the very changes that create development and marketing opportunities.
This “chapter” is a big part of family formation story and also changes for many people the core dynamics of the family home, such as the amount of space needed and where people live.
Smaller families with fewer, no or older children at home have different housing needs, and now there is an emerging debate about the extent of empty rooms in family homes as areas experience housing crises and reduced affordability, and in some areas there appears to be a reluctance to sell up and move. The reasons for this reluctance are complex, but can include flat house prices plus the cost of moving including stamp duty.
Last week a study funded by National Seniors revealed that Australians give a huge $22 billion a year to their adult children. Why? Well, as it happens, to help them get established and mainly to buy property, but also to tide them over tough times.
As I look at older families the same survey also showed Australians gave another $1 billion a year to help house and support elderly parents. For the housing market the transfer of money between Australians aged 50-plus into the pockets of their children and to elderly parents suggests a more complex marketing environment. We may well have two target groups for some projects – the actual people living in the property and those (possibly older parents) paying or helping to foot the bill!
As families age and mature, this will almost always leave mum and dad at home, alone for much of the time in a home that has far too much space for just two people. The family home is now occupied by empty-nesters and so many, but not all, move on and in the move capital is freed up or the family homes acts as security to help house the next generation.
This same family home will also in many cases be sitting on a large block of land, that could either be subdivided or redeveloped – the pressures in infrastructure-starved cities are obvious.
One family moves on and another family moves in, or depending upon location and the age of the family home, it and adjoining homes become ripe for redevelopment. Development then responds to the changing demographics trends in an area, and that triggers, for example, the construction of medium-density apartments. This change at times results in intense community debate, but if we accept that family formation shifts with time and reflects wider social trends than the change might be seen as less disconcerting.
As the density of housing in an area shifts so will local services change, schools will close, or new ones open and the retail and social mix of an area responds, the housing market does not remain static and change is frequent.Peter Chittenden is managing director for residential of Colliers International.