As the property market changes and evolves, so too does home buying and ownership trends.
In response to the rising property prices in our capital cities over the past few years, alternative pathways to home ownership have developed and are becoming more prevalent. Commbank recently identified eight emerging home ownership trends which they say we should expect to see more of in the next fifteen years.
While we’re not suggesting these methods of home ownership are or will be the norm, it’s interesting to note what changes and alternative pathways we might see in the future, stemming from current economic and social influences.
Here are the eight emerging pathways to home ownership, as identified by CommBank.
1. Collaborative buying
This trend suggests that current co-living situations will become more sophisticated and that advanced collaborative buying and living models will emerge. This includes “co-housing” which is when people either rent or own a smaller sized dwelling that is part of a larger development and has communal areas, whether it be a laundry, garden or dining area. Because these living spaces are smaller, they’re often more environmentally friendly due to more efficient land use, as well as more affordable.
2. Communities in common
As mentioned above, more Developers are moving towards builds with shared areas. This particular trend goes a bit further by suggesting that individuals with similar values and lifestyles will band together and form a new type of community. Part of this home ownership trend is a decrease in the size of our properties. Downsizing is nothing new, but by 2030, it is predicted that new dwellings will be an average of 119 square metres – half the size of the average house in Australia today.
You can read more about downsizing trends in Australian property here.
3. Group loans
Co-ownership of property is nothing new but continues to grow in popularity, and the number of requests for split reports that we receive is testament to this. According to analysis from CommBank this home ownership trend is rising, with 67 per cent of applications in 2016 having two or more applicants. They also found that the number of single applicants for mortgages is decreasing.
An increasing number of Australians are choosing to enter into a mortgage with a sibling, friend or trusted acquaintance, in addition to the more traditional choice of a partner or spouse. This growth seems to be in line with the rise of multi-generational living, which is a major social trend we’re seeing at the moment.
4. Joint ventures and syndicates
We should expect to see a rise in group development models as another way to increase buying power. This is when acquaintances come together to enter the property market as one group and buy and develop blocks of land collectively. This is becoming more popular as new home buyers realise it can be cheaper to build several properties at once rather than one dwelling at a time, which has traditionally been the case. These joint ventures could be made up of friends, family members or even strangers who wish to band together to take advantage of a cheaper price.
5. Guarantor loans
Guarantor loans – whereby parents or family members use their own property as security on a loan in order for their children to get into the housing market sooner – is nothing new, but is set to continue and even grow in line with our capital cities’ rising property prices.
6. Crowd housing
This trend is all about Developers communicating directly with buyers about what they want, in order to meet that need and reduce settlement risk. Online crowd housing platforms are increasingly connecting homebuyers who share common interests with developers and architects, giving them a fair say in what type of property they would like to see built and what features they’d like included. With many in the industry predicting an apartment oversupply in some of our capital cities in the next few years, it will be interesting to see if this trend does become more prevalent.
7. Staircasing
Staircasing occurs when a home owner buys a share in a property and gradually increases their share as their savings grow. This is new to Australia, but currently operates in other countries.
The British Government has a staircasing scheme whereby homeowners can pay as much as they can afford – usually 25 to 75 per cent of the total value of the property – and gradually increase their ownership stake as their funds grow, eventually “staircasing” up to full ownership. However, the “Help to Buy” UK system has received some criticism with owners having limited rights, still being responsible for 100 per cent of maintenance and repair fees despite not owning 100 per cent of the property, and because of the issues that can occur if the owner wants to sell their share.
8. Guesthousing
Part of the shared economy, this one refers to homeowners making their spare rooms or couches available to those in need of short term accommodation for a fee. This is already taking off in Australia with the growth of sites such as Airbnb.
Read more about how Airbnb regulations are about to change in New South Wales.