The changing future of home ownership

It’s clear that home ownership in Australia is evolving as a result of economic, cultural and demographic influences.

Over the next 15 years we’ll see the traditional path to home ownership move aside in favour of new methods that cater better to the emerging market.

New research from CommBank’s Future Home Insights Series has picked out a number of trends that are expected to have a noticeable impact on the Australian housing market between now and 2030. These include population growth, urban living and the increase in multi-unit dwelling construction.

Also influencing the way property is built and sold will be the broader collection of social groups making up Australia’s society, the series found.

Commonwealth Bank Executive General Manager of Home Buying Dan Huggins said these trends were likely to dramatically influence how Australians live in, buy and sell property.

“At the same time, these trends could change how lenders meet the needs of Australian home buyers in the future,” he said.

Here are the nine pathways to home ownership that CommBank has suggested will shape the Australian property market over the next 15 years:

Collaborative buying
Collaborative buying/living models will make co-living a more sophisticated matter. Generally, ‘co-housers’ own or rent a smaller-sized dwelling within a bigger development containing some communal areas. Being able to share laundries, storage sheds, spare rooms and living areas means each house can be smaller, thus reducing the price. Another bonus of co-housing is that it makes more efficient use of land which has a positive impact on each household’s physical and environmental footprint.

Shared loans
It’s becoming more common for people to share the burden of borrowing for a home by joining forces with a trusted sibling or friend.

CommBank’s figures show an increase in the number of applications with two or more applicants over the past two years, from 64 per cent in 2014 to 67 per cent in 2016. The rise in multi-generational living may be part of the reason for this trend, as it allows two generations to come together to contribute to the costs of a property.

Community spaces
It’s predicted that in 2030, the average size of a new dwelling will be just 119 square metres; around half the size of the average Australian house today. To make up for smaller private living spaces, developments are being designed with generous common spaces that allow communities of like-minded people in a building to mingle.

Joint ventures & syndicates
Unable to afford property alone, more and more Australians are pooling funds to gain greater buying power. Groups of people, whether related or not, are coming together to purchase property as a joint venture.

There are also economies of scale to be gained from group development models where people collectively buy and develop blocks of land, since the cost of building several properties at once can be much lower than constructing one dwelling at a time.

Guarantor loans
Guarantor loans are not a completely new concept, having already gained a lot of traction in recent years, but it’s predicted they’ll continue to become more popular over the next decade or so.

They offer young people easier access to the housing market sooner by allowing them to form joint property ventures with their parents or family members, who use their own property as additional security on the loan.

Crowd housing
Online crowd housing platforms let individuals who share common interests come together and connect with property developers and architects, facilitating the development of the kinds of homes people really want.

Buyers end up with a home that’s personally tailored to their needs and preferences, while developers have a reduced settlement risk thanks to the involvement buyers have had throughout the process.

The term ‘staircasing’ refers to gradually building up ownership in a home through the purchase of shares. This system caters to home owners who would not otherwise be able to afford a home, allowing them to increase their stake as their savings grow.

This is a new concept for Australia, but it has seen success already in other countries. In the UK, a government scheme allows home owners to make an initial payment of between 25 per cent and 75 per cent of the total property value, incrementally increasing their ownership stake when they have available funds.

Online portals such as Airbnb offer flexible arrangements renters, and have proved popular for homeowners wanting to monetise their spare room or couch. With a variety of sites offering long-term and short-term arrangements, guesthousing seems to be here to stay.

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