If you could live anywhere in the world, and money was no object, where would you choose to live?
That is a question posed by the Sydney Morning Herald and the largest group of readers – 36 per cent to be exact – said they’d prefer to live in the inner suburbs of our cities.
Now this is pretty understandable given that most employment, entertainment and lifestyle opportunities, are centered in and around Australia’s capital cities.
But of those who would like to live close to the city, how many can actually afford to do so?
The scary part is that the findings from a recent report, A New Lens on Housing Affordability and Market Behaviour, revealed that inner suburban housing is more affordable for singles and couples without children on incomes over $60,000 than it is for families on incomes of $100,000.
With increasing debate surrounding Australia’s affordability woes, it’s little surprise that the Australian Housing and Urban Research Institute, found families with annual incomes less than $40,000 were forced out of buying a home altogether, while those with an income between $40,000 and $80,000 were forced into the outer suburbs or growth areas to find their Great Australian Dream.
”Not until household income exceeded $100,000 was there much ability for families to purchase in the inner city and middle ring,” the report says.
Alarmingly, the report also concluded that 31 per cent of households had little capacity to save or buy anything more than what they needed to maintain a modest lifestyle after meeting their housing costs, and 14 per cent suffered major financial pressure.
”If we already thought it [affordability] was bad, it is actually worse,” the report’s co-author, Professor Terry Burke, of Swinburne University, said.
Worse off were renters and the elderly, while families with younger children under five also struggled, partly because some parents had to reduce their income as one left paid employment to look after the children.
As for the enhanced capability of singles and couples on higher incomes to afford housing closer in to the city, the study says, ”The development industry has already worked this out, which explains the proliferation of one and two-bedroom apartments in inner-city and middle-ring Melbourne in the past decade.”
”These household affordability differentials appear to be shaping a new urban and social form, with families and detached housing on the fringe and non-family households in inner-city and middle-ring locations,” it says.
The future of housing in Australia
This type of study provides property investors with an insight of potential future trends.
In the past around 70% of Australians were able to buy their own homes, but in the future it is likely that a larger proportion of Australians will remain tenants all their lives.
I’m not here to judge the social implications of this, but of course with knowledge of changing demographic trends comes the ability to better plan your investment property portfolio for the long term.
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