Place vs Space…a shift in the way we live.

Here is a bit of property economics 101, the closer you get to major urban centres the higher a property asking prices get. Accommodation closer to infrastructure, employment and education regularly attract higher demand from buyers and renters, consequentially achieving higher prices. This is a given, everyone knows living in more desirable areas will cost more, often for inferior properties too. It gets to a point where the cost of living is so expensive that buyers will sacrifice the place for space.

Buyers will happily trade off an extra half an hour to get to work, or a less trendy suburb if it means $200,000 less on a mortgage or an extra room to live in. This is commonly seen in the young family and home builder demographic, who are in the process of growing their family (often the most strenuous financial position on a couple’s life). The dynamic also works vice versa with the young professionals and childless couples, who invoke up much of the demand for inner ring properties.

To highlight how much this place vs space dynamic can affect local demand for property, the below is a cross section of Melbourne’s Northern corridor – one of the rapidly growing regions in Australia. Let’s have a look at how the data changes throughout each ring.



Northern Corridor Inner Ring Middle Ring Outer Ring
Average residents per dwelling 1.9 2.51 3.01
Households that require only 1 bedroom 54.3% 45.4% 34.8%
Households with children 19% 41.6% 57%
Proportion of separated houses in region 8.8% 59.6% 87.3%

Source: Australian Bureau of Statistics/


There is a vast difference in the makeup of each market which should be considered when choosing between your type of asset to invest in. As you move away from the CBD there is a larger portion of separated households with children and we can see that the average size of each dwelling is much larger. As the demographic in each region changes, so too does the type of property demand.

This has led to much discussion, around what performs the strongest, those close to major urban areas, or cheaper outer ring properties? The reality is that these differing markets attract different types of buyers and/or renters meaning they require different asset classes to capture market demand.

Inner ring markets have a much larger majority of apartment dwellings, that attract a much younger demographic with the less chance of children in the tenant pool. Smaller dwellings with a lesser number of average bedrooms fit this regions tenant pool. Melbourne’s inner north has an average of less than 2 people per dwelling; so naturally 1 and 2-bedroom apartments capture the largest portion of local demand.

Middle ring markets will include demand from a number of demographics from down sizers, family and group households. Often properties that attract the strongest amount of demand in the middle ring are those that hold prime locations, close by to major transport nodes, education facilities and local amenities.

Outer ring consists more heavily of larger sized living accommodations and the family demographic. Over half of the Melbourne outer ring dwellings include children, meaning your asset sections should be aiming to include larger floor space and proximity to communal facilities. This region often consists of separated households or oversized apartment dwellings that capture the owner occupier demand.

It seems that it is not a question of whether inner ring or outer ring properties perform stronger, as people will always be trading off place vs space to get the best of each market. What buyers should be focusing on is the type of asset they select in each market to get the best results. It is clear that different regions require different properties to capture market demand. We at Blue Wealth aim to highlight the best opportunities within Australia’s various property markets through research.

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