There’s a reason we’re focused on the built environment/property/real estate – whatever you want to call the buildings we live, work, and play in.
This sector rules the roost in our lives. Where we live and spend our time has a vast impact on our quality of life, much of our economic prospects, plus physical and mental health outcomes.
People mortgage themselves to the hilt to buy their patch of security or broadcast their success. Governments pay very careful attention to this big earner for their coffers (whether above or under the table). Businesses and residential tenants thrive or fail on the back of how much rent they have to pay. Workers are increasingly forced to live on the breadline to ensure the landlord gets paid, or travel vast distances to work.
Worst of all, countries go to war over land and the resources it offers.
And the broad thinking is that without real estate under your belt, you can’t assemble the wealth you need for a comfortable older age, given that in our world, you can’t rely on governments to step into the breach. Especially as they’re increasingly at the mercy of more powerful voices in the community, not to mention the economy.
So, when we spoke to demographer Mark McCrindle, who runs an eponymous consulting company, to ask him what big trends we can expect next year and beyond, the conversation inevitably and quickly turned to real estate.
We’d initially called him to see if he could corroborate the population trend away from big cities that Kaushik Chakraborty told us about in our recent podcast.
Chakraborty is Bentley Systems’ senior vice president Asia Pacific, and we asked him where the biggest business growth was likely to be in the next few years for the digital infrastructure work his company specialises in.
He nominated infrastructure to support growing populations in regional areas, which was a global trend and defence projects such as roads and rail, particularly in Europe.
McCrindle said that though his key focus is on Australia, he agreed with the broad global view.
“The growth of the regions that we saw as a response to COVID has continued, driven not just by post-pandemic working from home and decoupling from locally based work but also particularly by housing affordability.”
So maybe a lifestyle choice, but also one driven by necessity.
In Australia, it’s not de-urbanisation, he says, but a move towards regional cities such as Ballarat and Bendigo in Victoria.
The price of housing is driving other major social and economic factors, he added.
People are starting families later, in their early 30s instead of their early 20s, and families are getting smaller.
Another twist on the housing related influences is that we’re becoming increasingly mobile, McCrindle says.
As we increasingly live in apartments that are generally cheaper than houses, people are moving more frequently as they seek to upgrade or move for convenience and flexibility, and “chasing affordability”.
More people no longer have a “forever home”.
This is having an impact on social cohesion as people fail to connect with their communities, given that they may not be around for long.
While Australians have a history of egalitarianism, McCrindle can see growing community disconnection and fragmentation.
Expectations for the future – the stuff of hopes and dreams – have taken a battering as well. While a few years ago you’d expect about three quarters of people to expect they would be better off in three years, today only two thirds feel that way.
The impact of unaffordable housing, which, after rising food costs, is a major contributor to the cost of living crisis, has also impacted our fight for the climate.
McCrindle says concern for the climate has slipped from top concerns to around number 8 on the scale.
And there’s an unexpected upside from the challenges we’re facing.
The flip side to roaring house prices and inequality is that while material challenges continue, there’s a growing focus on a more meaningful sense of wellbeing.
Physical and mental health are more important; so too the quality of our personal relationships, McCrindle says.
And then there’s our highly developed appetite for self preservation and innovation. Australians are particularly resilient, McCrindle says: they will find solutions to the problems.
Humanity is like that.
Have a wonderful Christmas, New Year and holidays, however you celebrate them!
We’ll be back on 12 January.