Sydney doesn’t have enough three-bedroom apartments for boomers
AUSTRALIAN baby boomers looking to downsize from their large family homes are increasingly asking the same question: Where are all the three-bedroom apartments?
Cashed-up older homeowners seeking to leave houses with empty bedrooms and high-maintenance gardens are finding their options are fewer than expected.
In Sydney, there are almost triple the amount of two-bedroom apartments on the market as three-bedders, which is seeing the price of the larger properties soar three times the rate of the smaller ones – the biggest premium on record.
One such downsizer is Cheryle Strickland, 75, and her husband, Laurie. The couple sold their large house on 575 square metres of land at a quiet cul-de-sac in the Sydney suburb of East Ryde for A$2.4 million (S$2.1 million) in July 2023, and immediately started looking for a three-bedroom unit. They quickly realised their options were limited.
“We got a bit panicky,” Strickland said of the time when they were house-hunting. “We looked at high rises, we would have loved, say, a villa, but they do not make new villas anymore.”
The upshot is that many empty nesters are either staying put in their large houses – constraining a market already suffering from low supply – or they are competing with young families and professionals for modern three-bedders with lifts, central cooling and a pretty vista, bidding prices higher in one of the world’s most unaffordable markets.
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It is adding more pressure to politicians who are facing the heat from voters for lack of residential supply, poor affordability and rising homelessness, as Australia grapples with a once-in-a-generation housing crisis.
Clearing regulatory hurdles to boost high-density living – a sore topic for Australians – and building homes targeted at the baby boomer market are part of the solutions, according to industry experts and economists.
“We have obviously got a housing shortage, but we also have an efficiency issue where a lot of older Australians are in very big homes,” said Nerida Conisbee, chief economist at real estate group Ray White, pointing to 2021 census data that showed Australia had 13 million spare bedrooms.
“We can’t get a lot of older Australians out of their homes because there’s nothing really for them to downsize to,” she said.
Housing has emerged as the most significant cost-of-living issue among voters, eclipsing grocery and energy bills ahead of next year’s general election. Primary support for the ruling Labor Party has dipped to its equal lowest since the 2022 election, according to a Newspoll survey published in The Australian newspaper.
Older Australians are more likely to have one or more extra bedrooms, while most older Australians aged 55 and over who own a home do not downsize, research from the Australian Housing and Urban Research Institute (Ahuri) showed.
The main issue is that older Australians have extra space, while families with kids are struggling to find suitable homes, according to Michael Fotheringham, Ahuri’s managing director.
Traditionally, Australians prefer living in a house while apartments are usually popular with renters, young couples or property investors. Builders typically favour one and two-bedroom apartments in their projects because they are easier to sell, leaving a gap for retirees looking for a single-level, low-maintenance yet roomy place.
During the pandemic, the median value of three-bedroom units in Sydney surpassed A$1 million and the annual growth rate peaked at 18.2 per cent in the 12 months to November 2021, far beyond the peak in units with two-bedrooms or below, data from consultancy CoreLogic showed.
Median sale prices for three-bedroom apartments have grown by 27 per cent over 5 years, compared with 10 per cent for two-bed units, putting the premium for the roomier homes “at a historic extreme”, said PropTrack economist Eleanor Creagh.
That is also compounded by limited supply – two-bedroom units made up 60 per cent of apartment supply in Greater Sydney in 2021, census data showed, while under 16 per cent had three bedrooms or more.
It is increasingly the case that downsizers have to lower their expectations, said Benjamin Mulae, a real estate agent for McGrath Hunters Hill, a wealthy suburb about 9 kilometres north-west of central Sydney.
“We are not building enough of the right property,” Mulae said. “We have got an ageing population and we have got increasing demand for the right product,” he said.
The Stricklands ultimately settled for a two-bedroom apartment for A$1.5 million. They still think downsizing was the right decision, and are now looking forward to trips to the US and Japan.
“It’s best to sell when you are able to sell, and go and enjoy your life,” said Cheryle Strickland. “Now, if something happens to either of us, God forbid, we are in a small place, it’s manageable. If Laurie went before me, I don’t have gardens to worry about.” BLOOMBERG
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