As property investors it’s important to become a student of demographics and understand the type of property that will be in continual strong demand from both owner occupiers and tenants in the future.
While Australians have traditionally loved the idea of a house and land in the suburbs – an idyllic retreat to raise a family – times are changing and we are now beginning to embrace city and near city living on a much larger scale.
City living is nothing new for much of the globe’s seven billion odd residents
In ye old England for instance the upper crust often had a townhouse in London city and a sprawling country home for weekends.
However as the human race multiplies at an alarming rate of knots, for the first time in our history over half of us are living in big cities in both the developed and developing nations of the world.
And as just as a large portion of the world’s population is more readily embracing city life, so too are us Aussies.
Now let me be clear – by living in the “city” I don’t necessarily mean in the C.B.D.
I’m talking about medium and high density living in the suburbs in and around our C.B.D’s.
Think about it…
Australia was originally an agricultural society with many of us living off the land or off the sheep’s back.
Today more and more of us are moving from regional and rural Australia to the big smoke where the jobs are and where economic growth is.
Why is this change taking place?
Of course this trend started with the industrial revolution at the beginning of the 20th century, but many predicted with the advent of the Internet, people would move back to remote locations – away from all the hustle and bustle.
But the opposite is occurring.
According to Professor Edward Glaeser of Harvard University – a leading expert on urban economics – the answer lies in the human drive to prosper financially.
In his book Triumph of the City, he claims that cities are our greatest invention because, “Urban density provides the clearest path from poverty to prosperity.”
According to Glaeser, city dwellers not only earn more money than their outer urban counterparts, they are also more productive members of society, simply because of their close proximity to places of employment and the goods and services they deliver.
Specialist companies are attracted to cities due to a greater wealth of available labour and employees are drawn to these “urban jungles” because of the wide scope of job opportunities on offer.
Glaeser says cities allow people to come together and share in the pursuit of knowledge and ideas – an important commodity to the human race.
“Humans are an intensely social species that excels, like ants or gibbons, in producing things together.
Just as ant colonies do things that are far beyond the abilities of isolated insects, cities achieve much more than isolated humans,” he says.
“Cities enable collaboration, especially the joint production of knowledge that is mankind’s most important creation.
Ideas flow readily from person to person in the dense corridors of Bangalore or London, and people are willing to put up with high urban prices just to be around talented people, some of whose knowledge will rub off.”
This emerging trend, according to Glaeser, is largely due to the centralization of traditional inner city industries across the globe such as manufacturing, to countries where cheaper labour makes it more economically viable to produce goods such as China.
And as for critics of the world’s concrete jungles and the high price tags that often accompany property in these increasingly sought after areas who suggest advances in information technology will make urban living obsolete, Glaeser says human evolution will prevail.
“A few decades of high technology can’t trump millions of years of evolution. Our species learns primarily from the aural, visual and olfactory clues given off by our fellow humans.
The internet is a wonderful tool, but it works best when combined with knowledge gained face to face, as the concentrations of internet entrepreneurs in Bangalore and Silicon Valley would attest.”
Essentially, a computer keyboard cannot replicate or replace that innate desire for person to person contact that we all possess and that is found more and more in city culture.
How do you manage this growth?
The key to success for the world’s cities is how well they are managed – sustainable growth has become a buzz word.
Although Australia is seen as the “wide brown land” and many would argue that we have extensive natural resources, including open spaces to grow into as we increase in numbers, the fact remains that with the constraints of political urban boundaries as well as natural geographic ones like our coastline, our future growth will most likely be upward rather than outward.
In other words, we will require smaller accommodation on a larger scale, such as medium to high density apartments, located close to existing infrastructure – which is predominantly in and around our major cities.
Yes, we have a long held tradition of the family home on the suburban block, but as future outward expansion becomes less viable both economically and politically, it’s Australian cities that will provide the best answer for our growing population.
Gen Y’s are happy to swap their back yards for balconies to enable them to benefit from living close to work, entertainment and friends.
Of course for property investors, knowing how more and more Australians want to live will be invaluable when choosing where and what type of property to buy.
Hence this emerging demographic turnaround from the ‘burbs to city living is definitely one to watch.
You may also want to read: HERE’S WHY THE INNER SUBURBS ARE THE PLACE TO INVEST ACCORDING TO THE RBA