Affordable housing demand gaining momentum

Comparatively, strata properties have been steadily increasing throughout 2024, climbing from 31.43 per cent in Q1 to 32.62 per cent in Q2 and now sit at 33.01 per cent in Q3.

According to head of property at InfoTrack, Lee Bailie, these figure changes are evidence of the wider issue with housing affordability across the country.

“While the increase in unit sales may seem incremental, it shows home buyers are increasingly opting for more affordable housing solutions given current economic conditions,” he said.

“These developments, of which we’ve seen a boom along Sydney’s metro lines, have led to the decrease in single dwelling house purchases and an increase in apartment style living.”

Bailie said that medium- to high-density housing being purchased off the plan has seen an increase in 2024. Furthermore, he said houses also had a fall in the first home buyer demographic.

“House transactions have had an almost 5 per cent drop among this buying cohort this year, decreasing from 47.14 per cent in Q1 to 43.1 per cent in Q2, now only maintaining 42.91 per cent share in Q3,” said Bailie.

“Comparatively, units had a small uplift among first home buyers, from 54 per cent last quarter to 54.39 per cent this quarter. The reality, of course, is that there is greater affordability with units and apartments compared with houses, and as property prices rise, this is a trend we expect will continue.”

Western Sydney is reportedly the strongest region for first home buyer purchases, with the Central Coast also picking up steam.

“The postcode of 2259, which covers 42 suburbs including Tuggerah and Wyong, made the top 10 list of suburbs for sales. It joins 2250 encompassing 34 suburbs including Erina and Gosford, confirming the Central Coast’s property hotspot status,” Bailie said.

“The Central Coast is a lifestyle destination, with an array of attractive beaches, surfing hot spots, and national parks, but still offers every amenity for modern living, and is commutable to Sydney. Its relative affordability makes it a great option for first home buyers.”

The three most popular postcodes, according to InfoTrack, were:

1. 2170 (Liverpool, Fairfield, Casula, and surrounds)
2. 2560 (Campbelltown, Appin, and surrounds)
3. 2145 (Parramatta, Westmead, and surrounds)

The issue with this trend is whether the supply of affordable housing can keep up with demand. Steve Douglas, executive chairman at SMATS Group recently made a submission to the Senate economics references committee, discussing housing affordability across the country.

According to Douglas, the government’s role is to:

Encourage higher home ownership
Ensure the general market is fair and reasonable
Provide opportunity for expansion of housing stock to cope and manage population growth
Bring consistent supply of residential housing in areas of likely demand to ensure smoother resource and labour management
Encourage alternative building technologies for short-term solutions and reduced delivery time
Align new housing with environmental and social objectives
“To succeed, this needs a genuine long-term, bipartisan, multi-tiered government and national plan as it cannot be done by any single level of Government or industry. If ‘affordability’ is indeed the enemy of the community, then you must tackle cost contributors and be frank and honest about costs imposed that are not necessarily directly related to the provision and supply of housing stock and quality community building,” said Douglas.

“One item of conversation that is often lost in the generalisation of the topic of property is the balancing of new supply so that it meets the needs real demand of the increasing population and market. There is a genuine risk of making simple decisions to increase any property, where it is important that new property creation is targeted in areas of highest demand.”

Douglas said that this includes:

- Affordable housing (house, town house, large apartment) near city/transport for small families
- Family living zones with good support services
- Downsizer properties for early retirement into final care
- Good size inner-city apartments
- “This may seem obvious, however we have seen in the past a trend to build properties of convenience rather than demand,” he said.

“Housing affordability in Australia is not a single point of issue but embedded in number of issues that have changed in recent times. The rapid acceleration of entry stamp duty and land tax ownership costs, the diminishing of investor tax incentives, the building of inappropriate supply are more dominant in my mind than interest rates, landlord regulation and pre-GST property costs.

“At the end of the day, stable and appropriate supply is the only way you can balance a market in a real and permanent manner.”