As Australia’s economy expands, so does the interest in its real estate market, which has led to much speculation about the sector’s long-term prospects. Because of the rising population and demand for housing, competition has heated up in the national housing market.

Because of this rivalry, housing costs have increased, and supply has fallen short. Australia’s property market faces an uncertain future as demand increases.

A residential development company has specialized in residential buildings, including creating multi-unit structures of varying sizes and densities, from duplexes to high-rises. There are numerous facets to successful development, and Costas Constructions Company has created many of our projects over the years, so we know what it takes.

The Future of Residential Development in Australia

Strategic foresight is an emerging area of study that seeks to mitigate risk while making investment and reform decisions by predicting a range of plausible futures.

1.      The Primary Strain on Family Budgets Comes From Housing Expenses

Housing expenses are by far the most significant drain on average family budgets. Low-interest rates, strong investor interest in housing (partly due to volatility in other investment sectors such as the share market), and rising population and household formation relative to the rate at which housing supply has increased have all contributed to longer-term price increases

As a result, mortgage payments consume a sizable percentage of many Australians’ disposable income. Most Australian families’ debt is incurred when buying a home, accounting for over 90% on average. In addition, the ratio of household debt to disposable income is increasing more quickly than in other countries. To put it another way, Australia’s debt-to-income ratio in 2017 was higher than the 75th percentile of OECD countries.

The proportion of monthly income needed to service family debt. In Australia, it is at a record high, but the interest paid on that debt is at a record low. Even if house prices level off, rising interest rates threaten family budgets, especially if real wage growth continues to be anemic.

Between 2001-2004 and 2013-2016, the percentage of Australian households experiencing housing stress increased by anywhere from 0.4% (outer urban Queensland) to 3.5% (Urban Tasmania) (Figure 8). Those in the bottom 40% of the income distribution are considered to be experiencing housing stress if they spend more than 30% of their income on housing.

2.      The rise of the sharing economy is shaking up global economies.

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New sharing economies were emerging due to advancements in digital technology and increased connectivity, which has allowed the development of innovative approaches to the consumption of privately held products and services. Sharing economies encompass not only methods of transportation like car sharing and ridesharing but also shared office spaces, transferable skills, and loans between individuals.

Many Australians are jumping on board with these emerging markets before the Government even regulates them. More than 30% of Australians are presently using ride-sharing services, and another 16% are projected to do so within the next five years.

While its legal status was initially unclear, ridesharing startup Uber began in Australia in 2012 and was officially recognized as a lawful business across all regions by 2017.

There may also be advantages for workers, such as better work flexibility and choice; moreover, the long-term financial stability of a more casualized workforce is still being determined due to the employment patterns of emerging, disrupting businesses.

The presumption, or the greater integration of production and consumption, is rising in Australia thanks to the sharing economy and technological improvements.

3.      Economic Growth Is Difficult To Predict

Australia has had 28 years of continuous economic growth, which is a record. Since 1991, the size of the economy has grown by 130% in real terms, partly due to our expanding population and a strong export market for our natural resources.

Building on its sector strengths and proximity to developing Asian markets, Australia has strengthened its involvement in the global economy throughout this time without experiencing the severity of economic crises that have hit other global economies.

Real GDP serves as an economic performance indicator for Australia. Australia currently has a real GDP of about $1.8 trillion, making it one of the top 20 economies in the world. 101 According to forecasts from the Australian Government, average annual GDP growth will fall.

4.      In Australia, Corporate Expenses Are Significant

Australia is ranked 17th globally for doing business, trailing New Zealand (ranked most business-friendly), Sweden, Denmark, the United States, the United Kingdom, and the United Arab Emirates.

We are also behind our Asian neighbors, including Singapore, Hong Kong, and China.

This is caused mainly by high labor costs with good pay and working conditions, high land costs, high energy costs, and high regulatory costs, such as those associated with environmental requirements.

Businesses are increasingly utilizing cutting-edge technologies to boost productivity and value, but while these technologies offer value, they may also increase prices.

It is also becoming more expensive to match workers with employment; in some cases, this necessitates foreign migration to address domestic skill shortages.

5.      The population of Australia is increasing.

The population of Australia is tiny yet expanding quickly – concerning global standards. They are the 53rd largest country in the world, with a population of 25 million or the size of Shanghai. Yet, we are developing more quickly than other developed countries (1.8% annually compared to the global average of slightly over 1.5%).

Australia’s population has increased by more than 1.4 million since the 2015 Audit. Although population increase has many advantages, issues will also arise as it continues to develop.

If Australia wants to keep its high standard of living and economic output, it must address these concerns successfully. The ABS creates demographic forecasts to determine Australia’s potential future population using high, medium, and low growth scenarios.

Final Thoughts

Building materials in Australia have shifted significantly during the previous decade. Due to its existing housing stock being primarily made up of detached houses and its cities having a relatively low density compared to those of other industrialized nations, Australia is becoming more in line with worldwide norms as it moves towards higher-density housing.

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