High Density Living for Home Buyers and Property Investors
Welcome to 21st Century living where residing close to neighbours, public transport, cafes, office towers and bustling retail hubs is suddenly all the rage. Mortgage owners are finding savings in the form of more affordable high- density living.
Fifteen years ago the idea of high-density living becoming almost as popular as a detached dwelling on its own block of land would have elicited at the very least a raised eyebrow.
Not so nowadays according to rpdata.com analyst Cameron Kusher.
Today many Australian home buyers are choosing to live a high-density inner city housing lifestyle, particularly in capital cities.
Medium and high-density housing accounts for around 35 per cent of all home sales, and this figure is increasing. (In 1995 only 25 per cent of capital city home sales were units and apartments.)
In the two most populous markets, Sydney and Melbourne, there are a significantly greater proportion of unit sales. During August, unit sales in Sydney accounted for 43 per cent of all dwelling sales and in Melbourne the figure was recorded at 37 per cent.
Canberra and Darwin have also recorded a significantly greater proportion of unit sales with house sales accounting for 62 per cent and 63 per cent of sales respectively during August 2010.
The common trend between these four cities, which have recorded an above average volume of unit sales, is that they are also the four most expensive capital city markets.
Apartment living has become an acceptable option for young families and first home owners seeking a home that comes with a more modest home loan than traditional detached dwellings.
US journalist David Owen, writer for The New Yorker and author of The Green Metropolis maintains that high density, inner-city living is more “environmentally responsible” than the suburban Australian dream house and land package.
Speaking at the Queensland Government’s growth summit Owens said: “Residents of cities use less energy, less water, than the residents of suburbs.”
He said: “In the United States, New Yorkers have the smallest carbon footprint of any Americans – about 7.1 metric tonnes per person per year, versus the national average of 24.5 metric tonnes.
“Spreading people out across the countryside may make them feel greener, but it does not reduce the damage that they do to the environment. In fact, it increases the damage while also making that damage harder to see and harder to address.
“What you really do when you move to the country is move into your car.
“Moving people and their destinations closer together reduces their energy consumption in all categories.”
Rpdata research shows that the cities (Sydney, Melbourne, Darwin, Canberra) which have recorded the greatest proportion of unit sales compared to house prices are those in which units are significantly more affordable than houses, allowing people to save for a deposit on a unit much quicker than saving for a deposit on a house.
The rpdata study states that the driving force behind the increasing prominence of unit living will be that they are relatively affordable and in much greater supply in desirable locations, close to public transport, retail and dining amenity and major working nodes. Units also afford the opportunity to live in suburbs in which many purchasers would be unable to afford to own a house. Consequently units are viewed as a viable and more affordable alternative.
Another factor that is driving more unit sales is changing lifestyle preferences. Empty nesters are downsizing to apartments because of the lower levels of maintenance involved in apartment living and the close proximity to work and social precincts.
Looking towards the future, Kusher expects that medium and high-density living will continue to become increasingly prominent.
“Australia’s most mature residential market, Sydney, is already showing close to 50 per cent of all home sales as units. The drivers are going to be affordability, increasing densification of the inner city, major transport spines and changing lifestyle preferences.
Property investors are also jumping on the bandwagon, using the equity in their home to invest in units close to public transport, dining hotspots and amenities in the major capital cities. Kusher notes:
“Over the last five years we have already started to see units outperforming houses in terms of capital growth (7.3 per cent annual gain for units vs. 7.0 per cent for houses). With demand likely remain high in the unit, apartment and town home markets these higher capital gains may continue,” he said.