Units take centre stage in Sydney
Units will be the most popular type of new dwelling across greater Sydney in the years ahead, according to a leading industry analyst and forecaster.
BIS Shrapnel’s Medium and High Density Dwellings in Sydney Suburbs report, released today, reports an upswing in commencements for medium and high density dwellings in the Sydney market and predicts a continuation of this trend in the years to come.
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A combination of a lack of development sites, affordability constraints, changing dwelling preferences and demographic influences has changed the composition of housing development in Sydney, the report found.
Compared to other cities, detached house construction in Sydney would be less prevalent between now and 2015, BIS Shrapnel said.
After accounting for around 50 per cent of total dwelling activity in the 1990s, houses have comprised less than 40 per cent of total dwelling approvals in the last decade, the report found.
Conversely, the share of medium and high-density dwellings has increased from around half of new dwellings, to just over 60 per cent, and BIS Shrapnel forecasts this balance to continue.
Robert Mellor, BIS Shrapnel managing director said 20 to 34 year old households would have the greatest level of occupancy of higher density dwellings between 2011 and 2015, due to affordability pressures and dwelling preferences, while 65 year old and over households would be the second largest occupier of medium and high-density dwellings over the forecast period.
“Despite the 50 to 64 and 65-plus age brackets having the fastest rate of population growth, they still have a high propensity to be living in detached houses. Nevertheless, their rate of occupancy of medium-density and high-density dwellings is rising, and we expect this group will become an increasingly important source of occupier demand for higher-density dwellings between 2011 and 2015, based purely on population growth,” Mr Mellor said.
With their children having left the family home and retirement approaching, BIS Shrapnel’s research suggests an increasing number of people in this age bracket will elect to downsize, preferably to a smaller and lower-maintenance medium-density dwelling.
It is also likely they will not move far and will remain in middle ring or, increasingly, outer suburb locations where prices are more affordable, Mr Mellor said.
BIS Shrapnel expects demand will be greater for dwellings in the more affordable areas, with price growth in the middle and outer ring suburbs of Sydney outpacing price growth in inner Sydney.
Unit price growth is forecast to average around five per cent per annum over the next five years in inner Sydney suburbs, and closer to six per cent per annum in the middle and outer ring suburbs over the five years to 2014/15.