In a recent survey release by the Australian Bureau of Statistics, the number of one-person households will surge to between 3 million and 3.6 million by 2031. Michael Grochowski, in his weekly commentary, says this represents a big increase on 2006, when just 1.9 million people lived alone.
The ABS forecasts that couple-only families will overtake the number of couples with children in 2013 or 2014. By 2031, couple-only families are projected to account for up to 60 per cent of all people living in couple relationships.
Yet according to Grochowski, it is affordability more than any other factor that is boosting acceptance of small units.
Real estate agents in Melbourne say many buyers are giving up on the idea of acquiring a two-bedroom apartment of 70 square metres to 75 square metres as these can be priced at $600,000 to $650,000, which is more than most first home buyers or investors are willing to pay.
Grochowski quotes the Oliver Hume Real Estate Group which recently assessed 30 new unit projects in Melbourne. It found one-bedroom units had a median size of just 48 square metres, 4 per cent smaller than the typical new unit in 2010. In a sign of changing attitudes, the drop in size for single bedroom units hasn’t been matched by a decline in the median entry price, which jumped by $17,000 to $387,000.
Mr Michael Grochowski says there continues to be quite a bit of cultural resistance to one-bedroom units and a larger premium is paid for two-bedroom units, regardless of household size. But the affordability argument is proving to be a powerful persuader and this perception is changing.
Grochowski notes there are few constraints on the supply of new units and this has the effect of making an older-style one-bedroom unit a better investment. The older apartment consistently remains in good demand.
Grochowski also comments that it is regrettable that most research on capital growth fails to differentiate between new and old apartments.