Mark McCrindle tells us about the Urban Living Index and what it tells us about the property market of the future. We will tell you how you can get it it as well.
Kevin: I’d like to introduce you now to Mark McCrindle. Mark is a social researcher, author, futurist, and he is responsible for a website called McCrindle.com.au and also the Urban Living Index, which we’re going to pretty much focus on today.
Mark, thank you so much for your time.
Mark: You’re welcome, Kevin.
Kevin: Congratulations on that report, too. It centers a lot around the Sydney area, which I guess is where most people when they talk about real estate now are pretty much focused on. But based on what you’ve studied, what are the real estate trends that you saw in 2015, and what’s likely to occur this year?
Mark: Right across our capitals, particularly our eastern seaboard capitals, we’re seeing population growth. It’s quite the year of growth. In fact, next month, Australia will hit 24 million. Next year Sydney will hit 5 million. Queensland is on track to hit 5 million as a state over the next year.
We’re seeing lots of population milestones being hit at the moment, and that’s because we have some pretty significant population growth on at the moment – not only the natural increase with more than 300,000 babies being born every year and people living longer than ever, but through the cultural diversity that’s building our population, we have population growth.
The sprawl of our cities can’t continue unabated. We’re seeing people now start to opt for a more densified form of living. A lot of the units and apartments are taking off in our capitals and creating a lifestyle with that where people can walk to the needs that they have in their life and have a little bit of a lifestyle that doesn’t just rely on being in the outer suburbs, getting in a car all the time. In fact, now in Australia 46% of all households get by with one car or none. That’s some of the lifestyle changes that we’re seeing, and it’s a bit of a trend for the next few years.
Kevin: Has that escalated a lot in the last few years compared to what we were looking at, say, a decade or even 50 years ago?
Mark: It sure has, and particularly the people choosing that sort of city living. It used to be more for those if you couldn’t afford a house, maybe you would rent or you would get something in the city, a smaller unit. It was often where you had a higher older population in some of those city areas.
But it’s all changed. In the last generation, it’s become a lifestyle pursuit. You have young couples moving into the cities. You have higher net-worth downsizing baby boomers moving into the cities who don’t need that empty nest house anymore.
You have even those starting families or with young children moving into the urbanized areas because it’s got a bit of a café vibe. They can walk to some of the connections. It’s closer to the workplace. You have childcare offerings there. Sometimes even it’s easy to access the public transport and get to mom and dad’s house, that sort of thing.
Whether it be students, whether it be those that are downsizing, or whether it be young families and couples, we’re seeing more demand for the lifestyle and the built amenity that is found in the more densified areas and harder to get in some of the outer suburbs.
Kevin: I mentioned at the introduction there, too, that Mark, you’ve developed the Urban Living Index, and there is a website for that, UrbanLivingIndex.com. Tell me a little bit more about that. How did it evolve?
Mark: We looked at and wanted to measure what is it that defines and creates livability in a city today? What are the key aspects? We looked at five categories. You want accessibility to work and to transport. You need amenity, which is the shopping centers and the art and recreational pursuits, restaurants, and educational facilities. You need employability, so it needs to be accessible to where work is. If an area has a high employment rate, that says something positive about the area.
Community is important – what are the people like – and that can be measured through things like the volunteering rate, workforce participation, even the diversity of the language in the community. Of course, affordability is important, as well.
We took those five broad areas; each has four separate measures, so overall, there are 20 measures that make up the urban living index. We rated every suburb across Sydney – and we’re going to do the same across Melbourne and Brisbane, as well – to find out based on this index what are the highest areas of livability.
We found that there’s a strong correlation between those that are more densified and have more of that medium- and high-density housing with a positive urban living index, because they tend to be closer to work and employment and education and shops and cafes and the like, they tend to be somewhat more affordable than a detached home, and certainly from a population perspective, you get more of that diversity, you get people participating in education and the professionals and the like. All of that helps create that urban living index.
Now, it’s not to say that the suburbs don’t have livability – a lot of them have a lot of green space and nice amenity – but from a built amenity perspective, from a built environment perspective, you’re more likely to get that infrastructure in the built-up areas rather than the middle or outer ring suburbs.
Kevin: The top-ranked suburb, I think – if I’m reading it correctly on your report here – came in as Crows Nest in Waverton, which is fairly close to the city on the train line, of course, and fairly heavily populated.
Mark: Exactly right. Then you have some of the city areas like Surry Hills and inner city areas like Marrickville, Pyrmont, Ultimo, Potts Point, and the like. They ranked very strongly. And now not too many people could afford to buy a detached home in those areas, but from a rental perspective and even buying units, there are a few options there. Certainly, their location does work out pretty well from some of those other measures.
The further out you go, we had some areas that did well in affordability – that’s why people are moving there – but perhaps didn’t do as well in some of the employability and the accessability aspects of the measure.
That’s how it played out, and certainly it does show that not only is there good livability in some of the unit and apartment living, but Australians have changed their mind on that and are happy now across those different life stages to consider that as a form of living compared to the Aussie dream, as once defined: the house with the shed in the backyard and the two-car garage and the detached home of old.
Kevin: Just to build on this, I want to get you back in the next couple of weeks, too, Mark, and we’ll talk about some of those lifestyle trends that you’ve seen occur as a result of this report. Thank you so much for your time. I want to tell you the web address is UrbanLivingIndex.com, and if you want to go and have a talk to Mark and his team, their direct website is McCrindle.com.au.
Mark, thank you so much for your time.
Mark: Thanks, Kevin.