What changing family structure means for the property market

Recently I made a brief reference to the release of the 2011 census. And while I will doubtless return to the census results, I was reminded of my own regard of how an understanding of the impact social change is a key influence on the housing market, and in turn how we manage the guiding principles of our marketing.

In particular I have always had respect for an understanding of how the major factors of “family formation” influence demand in the housing market. They are generally acknowledged as driving much of the demand for housing because as family structures evolve so do housing needs.

Population growth from internal and external migration will always be of critical importance. In many cases migration can also be linked to changes in the family structure, such as the obvious example of family members relocating to another country. Also consider the impact of families relocating to another state or city to secure employment.

Families a wider meaning

Although in modern times the word “family: now includes a much wider definition than it did in the past, the social structures of how we live and who we live with, or who we do not live with, still acts as the major influence on where we look to establish our lives and homes and why we move to or from a particular area.

The trends also apply to varied degrees in a wide cross section of social and ethnic communities. Many of the strict boundaries between social class and ethnic origins have now broken down. But many communities based upon shared ethnic roots still play an important part in shaping some areas of our cities.

The importance of structural change in personal living arrangements appears then to over time to represent one of the main factors that drive demand for real estate. An awareness of these life changes is essential and can be used in many aspects of project marketing.

It requires little imagination to see the impact of what happens when a number of these key events occur in our own lives. While social structures will continue to evolve they are still essential elements in what helps to influence the choice of where we live.

And so I think there is real value in devoting time to explore these key influences, and be alert, as trends not only show up in the census but how they are impacting our own experiences.

From family home to own home, and all the steps in between:

When I was a young adult, it used to be that turning 21 involved getting a key to the door of the family home. Sometimes this was literally a real key to the door, so that you could enjoy your new freedom as an adult to come and go, or simply go and keep a key for those occasional return visits – as some commercials on TV would have us imagine with our washing in tow for mum!

Leaving home would clearly drive demand for new and more accommodation units. Either a first flat or a share house, this first step away from the family home was this step drove demand at a very basic level. Moving out of home clearly drives the first stages of new demand for housing.

While there will usually be many steps between moving into a first rented flat to a buying a house or apartment, new buyers entering the market are very important to the housing cycle.

Change in this area will have far reaching impacts, and we are already seeing this impact in our markets, as housing construction levels are now the same as they were in 1951.

Now research suggests that in their 30s and 40s some adult children are slower than ever in leaving the security of the family home, or just making the step to purchase their own home. Right now this is a real trend in the market, and the flow-through impact is, as highlighted above, extensive.

First-time buyers are seen as so important that they are more or less always given varied forms of financial incentive and encouraged to enter the housing market. The value of this assistance is valued at hundreds of millions of dollars and in NSW first-home buyers will receive a big boost from October 1, 2012. The rental market in 2011 is 29.6% of the housing market, up from 26.3% in 2001, which further highlights the fact that fewer new homes are being built and sold.

Now as the baby boomer generation, the parents of some of these late-to-leave-home adult children are starting down the path of retirement planning their housing aspirations and needs will also another huge factor in the market. The median age of all Australians is now 37, that’s two years older than 2001.

Much of the existing housing stock is owned by the baby boomers, and their plans are helping to fuel demand for new inner-city apartments. They also fuel much of the “change” trends.

Baby boomers (55-64) in empty nests are selling up and are not only still seeking an active retirement via a  sea-change or a tree-change, but a local-change as they move to sedentary retirement (65-74) and are looking to move from the large family home to a nearby apartment or townhouse in the community they know and love.

This is a market that has become so important it is now overflowing with marketing clichés. However if these same baby boomers, like some of their children, prefer to stay put in their existing homes, then another possible stream of activity and supply in the housing market is impacted.

There is also reason to suggest that more independent and healthy baby boomers are staying put because of the high costs associated with moving, a fact that is further amplified if house prices a flat and if moving also involved big stamp duty imposts.

While the impact of these two groups of themselves are hugely important they are only part of the wider picture driving demand, but they serve as important examples of the wider trends that project marketing needs to take into account.

The very real impact of family formation

Having started to look at the role and relevance of varied stages of family formation and in some cases family de-formation, (the impact of divorce is massive) it is very easy to see why this topic has always, for me, been top of mind.

In planning marketing for almost any project, this deceptively simple influence on the needs of consumers as their life-cycle shifts cannot ever be overlooked. There are many useful tips from what many of us either experience firsthand or see others experience.

Historically various reports, including many prepared by the Australian Bureau of Statistics, have pointed to the major influence family formation has on the demand for housing. Not to mention the wider trends picked up in research including the 100 years of census data that we all have access to.

The life cycle of most individuals and their families can be seen as a core factor driving and changing demand. It can also be argued that many of the changes to underlying trends will also point to future trends that the housing market will need to accommodate.