A snapshot of young city dwellers: Peter Chittenden

Peter ChittendenJuly 1, 20130 min read

It might not come as a surprise that most CBD dwellers are young, in Melbourne 67% are less than 35 years old. Most live in households of only 1 or 2 people, many rent and most are very well educated, but income profiles are not remarkably different from the wider population.

So it is safe I think to assume that we are dealing with a ‘Young and Restless’ market, but a more detailed picture is evident if we start to look at these headline trends in more detail. I also think it is very clear that large markets like Sydney and Melbourne contain various sub-markets that we need to understand and accommodate in our marketing decisions.

Avoid the stereotype

In lots of marketing material for new projects I find myself reading what appears to be a fairly standard project outline that starts of with copy something like this – ‘our aim is to create a living, functional community reflecting this vibrant location, that appeals to a mixed demographic creating a unique place to live’ – fair enough I guess, but possibly a little lazy and in the case of many CBD projects I suggest a bit obsolete.

To help establish a more robust descriptor here are some key facts about the age profiles of CBD residential markets in Sydney, Melbourne and North Sydney. The figures show a clear trend, but I do not think the figures should be seen as universal, but they do show a strong correlation.

Young and passing through

In the Melbourne CBD, according to figures published by the City of Melbourne, the three biggest age brackets are 20-24, 25-29 and 30-34 and this is why 67% of CDB residents are less than 35 – clearly a young market, where it would be reasonable to assume the bright CBD lights are the key attraction, along with access to higher-education.

In Sydney the picture is similar, the two biggest age brackets for people moving to the CBD are 18-24 and 25-34 and it’s the same for North Sydney. These two markets also share another key population measure that is prominent.

The biggest age bracket when people make the move out of the CBD to another market is in the age bracket 35-44, plus there is a not to be unexpected link to the 5-11 years group which could well be families leaving the CBD, and this is reinforced by where this group moves to, which I will return to as the trends there may directly impact marketing tactics.

Another key age bracket in the Sydney and North Sydney CBD market is the high number of arrivals in the 55-64 age range, and this group while not the largest by any means is notable because it is growing. Both the Sydney and North Sydney markets and this is equally true of Melbourne now have market precincts that would attract older buyers.

The Sydney CBD market in particular now has some clearly established precincts that offer their own distinctive ‘brand of CBD living’ and that trend is set to continue. These sub-markets or sub-brands include the north, the sandstone belt, south, Chinatown and waterfront locations and these locations will become more distinct as the city grows and buyers become more choosy.

While some high-end projects attract a lot of attention the percentage of rented accommodation also aligns to the fact that NSW now generates some $5.8billion in education exports, and students have a big impact on the CBD market and its investment appeal.

CBD migration

The population gains and losses of the CBD markets are also strong marketing pointers that send a very interesting message. The trends are very useful when planning how to engage with the demographics that are playing out.

In the case of North Sydney when people leave the CBD area they tend to stay on the North Shore or go to the Inner West, where families looking for a traditional home might be attracted and still keep some connection to their former homes. Then when we look at where buyers move from into the North Sydney CBD market we see this movement coming from the North Shore and the Inner East.

If we look at the City of Sydney this movement, while similar in structure, is slightly more diverse. People leaving the CBD appear to move to areas with traditional housing and within the top five destinations, more possibly affordable housing and given that some of those leaving will now have children, access to schools.

And so we see our CBD population move to the Inner West and to a number of closer suburbs in Sydney’s South. Those moving into the CBD come from a mix of locations as well, including from the South, Inner East, Upper North Shore and The Hills District – the diversity of locations is perhaps not surprising given that the Sydney CBD market is also a very mixed residential market. It is no longer just a particular cluster of buildings, it has wider and evolving appeal including to older buyers 55-64.

The picture thus far

CBD markets are at first glance seen as diverse places, but rather like our marketing copy suggests, the CBD market is still evolving. We already know it is a young market, where most people live on a 1 or 2 person or 3 and 4 person household, but thereafter around the age of 35-44 make a move away. Facilities are important, it’s an attractive rental market, but it also appears that’s how residents relate to services and facilities may be very different. After all the CBD is still very much a shared ‘experience’ – with residents alongside office blocks and big numbers of workers and visitors moving in and out of the city daily.

Having taken this brief snapshot of the CBD market, in my next post I will detail some of the feedback and comments from recent Sydney buyers. It all goes to further reveal how our CBD residential markets are changing and managing their growing pains and how as project marketers we need to stay attuned.

Peter Chittenden is managing director for residential of Colliers International.

Peter Chittenden

Peter Chittenden is managing director for residential of Colliers International.
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