More units will be needed in the next 15 years to accomodate Australia’s growing population.

Price growth may have slowed this year, but with Australia’s population expected to grow significantly, even more pressure is expected on housing prices.

The first Commonwealth Bank Future Home Insights Series report revealed an additional six million people would live in Australia by 2030.

UNIT MARKETS AT RISK

CommBank senior economist Michael Workman said the result would be more unit development to accommodate demand.

New units now made up half of all new dwelling investment, he said.

And with one person households the fastest growing group as of 2016 that would also have an impact on the type of product offered with smaller apartments and houses configured to suit lone residents.

Michael Workman tips more unit development to house Australia’s growing population.Source:News Limited

Mr Workman said Melbourne would be Australia’s biggest city by 2030 which would mean a lot more unit development.

“The character of Melbourne has changed tremendously over the last ten years and there will be a lot more of this high density living in the city,’’ he said.

“We are still seeing very high levels of detached housing construction in those suburbs as the city spreads.’’

He also tipped more units further out of the city and a lot more within the 10km radius of the city in the older industrial areas.

“It will be like Manhattan and those other big cities like London and not just close in but even further out. You can see that when you go to these cities now, I think it has been happening for quite a while.’’

Could Melbourne become like Manhattan where the majority of the population lives in high rise?Source:News Limited

Demand in Sydney in the coming years would be focused within 8km of the CBD, and Mr Workman said it was unlikely prices would drop in that region.

“There is very intense pressure for the well-heeled to buy more property and in a way these peculiar superannuation changes (announced in the Budget), when people realise exactly what that means it is likely at the margin to deliver a little more money towards higher end property and that (property) is all within quite intense activity within that 8km radius of the city.’’

While Brisbane would still be affordable compared to Sydney and Melbourne, Mr Workman doesn’t believe the population squeeze in southern states would drive more buyers north.

“Net migration data is quite clearly showing that there is still significant migration within New South Wales towards the central and northern coasts but in terms of going up into Queensland it is nowhere near as strong as it used to be from New South Wales and Victoria,’’ he said.

SUBURBS TIPPED FOR PRICE GROWTH

“It doesn’t suit people now that are most probably contemplating retirement and moving and the jobs market up there is not as strong as it used to be, that is the other issue particularly through regional Queensland, it’s actually quite depressed around Townsville and Mackay not such much Rockhampton and to an extent Cairns as well.’’

Mr Workman said Adelaide would experience more unit construction and that would be as a result of a push from overseas students.

“We talk to the property developers there fairly regularly and the interesting thing is that quite significant amounts of overseas funding and overseas funded developers are present in the Adelaide market,’’ he said.

“They will just decide to put up an apartment block, so there will still be a lot of apartments built in Adelaide and you can see it in the approvals data and they market the apartments back to Asia and it is not a problem.’’

Unit product may actually end up smaller to accommodate growth in lone person households.Source:Supplied

While the Perth market would continue to be weak the rest of this year and flatten out next year Mr Workman said it already had an oversupply of units.

“Many of the new proposed developments won’t be constructed, thankfully, but the vacancy rate on the residential side of apartments is significant because rental growth there is negative through the year and that is telling you that there has been a very big change in demand but also this oversupply problem won’t go away because the jobs market there quite weak.’’

Darwin would be in a similar situation to Perth but the market was a lot more volatile.

Mr Workman said the large LNG project was at peak employment now and would shed thousands of jobs by early next year.

As a result workers would leave Darwin because the high paid jobs wouldn’t exist and the real estate market would reflect that.

Mr Workman said the Hobart market was “very quiet’’ and he expected that to continue as it was a state that people had to leave to find high paying jobs.