1. Introduction
A home can be viewed through many lenses, as a shelter, physical structure, or private refuge, or as a matter of self-identity and a social and cultural unit [
1]. However, despite the importance of home ownership, young people across different nations generally face a low prospect of accessing the housing market [
2,
3,
4,
5]. This low prospect for young people in accessing the housing market has been attributed to social and economic factors such as unaffordable housing prices, insufficient income, and access to finance [
2,
5]. In places such as Australia, which is a predominantly home-ownership country, there are issues of shortage in housing supply [
6,
7]. Hence, young people in Australia are turning to alternative options for accessing housing, such as the build-to-Rent (BTR) housing model [
8] and staying with parents [
9,
10], among other options.
The percentage of homeowners in Australia is above the average mark of the ownership hierarchy of most countries. According to the 2021 population and housing census, 67 per cent of Australian households are homeowners, while 37 per cent are renters [
11]. Among the population, 83.5% of those aged between 15 and 24 and 55% of those aged between 25 and 34 are in the rental market [
11]. This distribution is, however, expected to change in the coming years as the country experiences acute demographic changes and as house prices continue to surge high. Experts project that the number of households seeking rental accommodation in Australia will increase [
4,
5,
12,
13]. Just like many advanced countries, Australia’s urban residents are experiencing the effects of rising house prices. The rental sector often provides an alternative for households priced out of the homeownership market to access decent housing [
14,
15]. The conglomeration of Australia’s population in its big cities seems to heighten the demand for housing [
16,
17,
18]. Additionally, the government’s migration policies continue to attract talented young professionals from around the world [
18]. Unfortunately, the channels to match the growing housing demand with adequate supply remains limited across private and public actors.
The peculiar housing supply challenges in Australia relate to the limited financial capacity of individual investors and the absence of affordable rental housing programs [
19,
20,
21]. A well-balanced housing market is needed to meet the housing needs of the young adults living and working in middle suburbs and inner-city areas. The build-to-rent (BTR) housing model, a new institutional asset class in Australia, is a promising avenue for providing rental housing on a massive scale [
22]. In Q4 2022, 3800 BTR housing units were completed in Australia, with a further 8400 units in the pipeline [
23]. The pace at which BTR is advancing has inspired experts to draw linkages between institutional investors and the affordable rental housing supply in Australia [
24,
25,
26,
27]. However, there is no clear evidence on whether the asset class could help meet the housing shortfalls [
28,
29,
30]. Although the literature on Australia’s BTR housing industry is growing, not many empirical studies have been conducted on the operational aspect of the asset class. Perhaps this is due to the lack of a track record of the asset class in Australia. Brill and Durrant [
31] posited that the trajectory of extant literature presumes a blanket consensus on the proclivity of the asset class to affordable housing. Understanding the perspectives of the target group in question is critical to shaping the government’s policy outcomes and interventional initiatives towards the BTR housing industry.
The prospective BTR housing renters, in this case Australian young adults, hold their view on the ongoing discourse on making BTR work in Australia. Abidoye et al. [
8] reviewed the relevant studies to identify the critical success factors (CSFs) of the BTR housing model. The common themes in the CSFs are important to Australian young adults as rising house prices often affect this section of the population. Going forward, Australian governments at different levels are deliberating on the incentives for BTR investors across various states to help provide affordable BTR housing units. In doing so, the perception of young adults about the CSFs is relevant in the discussions in Australia. This paper is one of the first empirical studies measuring the awareness of Australian young adults on BTR and identifies which of the CSFs is most important to them. This paper fills this gap by contributing to the understanding of BTR in the Australian context. It sets a fundamental basis for policy reforms and implementation from the perspective of the prospective tenants to guide the distribution of government support for the BTR housing industry. This discourse is particularly important following the COVID-19 era, which was characterised by intermittent lockdowns, property inspection restrictions, and regulated mobility within the local government areas in Australia. The impact of these directives on property owners and renters across the country is vast [
32,
33].
2. Literature Review
Rental housing has been proposed as a beneficial solution for young people in urban areas, on account of the flexibility and affordability it offers. Given growing housing affordability concerns across the globe, rental housing can contribute to sustainable and inclusive cities to support the evolving needs of younger generations [
34,
35]. The alarming trend of housing affordability and the increasing challenge for young adults to afford homeownership has ignited scholarly discussions in numerous countries worldwide, e.g., Castro Campos et al. [
36] in Hong Kong, Lux et al. [
37] in Czech Republic, Ronald et al. [
38] in Netherlands, and Vangeel et al. [
39] in Europe.
The most recent dispositions have attempted to relate BTR to the same target group, most of whom fall within the category of mid-to-low-income households. This review provides an outlook on the potential use of the emerging BTR asset class to serve Australian young adults. Globally, the private rental sector has been encouraged in some countries as an avenue for achieving policy goals, including addressing housing affordability issues, increasing the housing stock, and reducing pressure on public housing [
7,
26,
40]. In many countries, the rental tenure has attracted a lot of funding in private investment [
19,
40,
41]. For instance, rental housing investment in Australia recorded a 25% increase from 1996 to 2011 [
19]. Apart from the increased private investment, the sector has aroused massive interest among policy advocates who envisage a futuristic orientation of the tenure, especially in urban settings. More enquiries are being made into using the sector to achieve specific housing policy outcomes. Although the BTR housing model is novel in Australia, it provides several pathways to assess the likelihood of serving young adults with high-quality rental accommodation in the country’s big cities.
The provision of affordable housing in Australia aims to ensure the welfare of its young population [
42]. Aside from the numerous propositions to alleviate housing-related poverty among the mid-to-low-income groups, this concept is recalibrated to reflect the needs of young adults [
43,
44]. The recurrent debates and challenges of housing affordability and housing supply issues demonstrate how these discussions are in Australia [
7,
41]. Over the years, access to home ownership has declined among young Australians in the following age groups: 15 to 24, 25 to 34, and 35 to 44 years [
9,
45,
46,
47]. Chia and Erol [
9], citing data from the Household Income and Labour Dynamics in Australia (HILDA) 2017 survey, reported that home ownership for young persons aged 25 to 34 declined significantly from 52.2% to 29.2% between 1996 and 2014. Furthermore, Burke et al. [
48] project a decline in Australia’s homeownership rate by 2040.
The rental market in Australia is generally viewed as strong, despite localised variances across states and persistent challenges of affordability and supply of low-rental homes [
49,
50,
51]. However, the rental market is not affordable to many young adults [
52]. The Australian Institute of Health and Welfare (AIHW) reported that 28% of Australian residents aged 15 to 24 years experienced acute housing stress due to living in low-income households; this was most experienced by residents in the major cities [
49]. In most countries, young people are more likely to face housing stress than the older population [
53]. Depending on the social structure, young people are either commencing their careers and renting or have successfully secured a mortgage to buy their first home. Policies to expand affordable rental housing will likely benefit young people more than any other group. The BTR housing model has, therefore, become a major area of focus for government intervention to promote access and affordability. Though, there exists a note of caution, as pointed out by Borgesen [
54]: housing interventions targeting the supply side of the housing market tend to present indirect effects.
Build-to-Rent: A Nexus for Affordable Housing
BTR is a new form of private renting categorised as a commercial asset rather than residential [
22,
55]. Due to its hybrid nature, it is mostly perceived as a revenue-generating asset, not as a home [
31]. Concerning its theorisation, scholars present it to reflect the needs of the specific stakeholder involved. For instance, an institutional investor is likely to view BTR as a financial asset, but from the perspective of policymakers, it will be expected to generate social investment returns. The literature covers wide-ranging areas across different countries, including the understanding of the asset class, assessing its financial viability, examining government intervention models, and exploring the barriers [
8,
26,
28,
56,
57,
58]. A more forward-thinking school of thought discusses it in the light of an affordable housing provision [
30,
59,
60,
61]. The current conceptualisation raises questions about using it as a panacea for affordable housing. This is, however, not far-fetched, as countries such as the US and UK hold a significant proportion of rental investment in their multifamily housing sectors [
62].
In the US, BTR, also known as multifamily housing (MFH), has existed since the 1960s [
34,
63]. It serves as an alternative investment to institutional investors, making up 43% of the total rental stock in the country [
64]. Through government incentives, MFH has provided a considerable amount of affordable rental housing in the US. The UK has also had a decent track record, although not as progressive as the US. The UK government has committed billions of British pounds to the BTR housing industry to help augment the efforts to advance the private rental sector [
65,
66]. Again, the contribution of BTR to the UK’s private rental sector in terms of stock is significant. Like Australia, the ongoing deliberations concern a better understanding of the asset class, specifically the dynamics to adequately integrate it into the planning framework and implement the right incentives to spearhead an affordable housing supply.
There are various mechanisms previously adopted or proposed in the literature to advance the BTR industry worldwide [
31,
67]. These mechanisms serve as a blueprint for countries that are transitioning to a full adoption of the BTR housing model. These interventions range from instituting measures to attract greater institutional investment from private actors to reforming government interventions to cushion investors’ activities while supporting renters. Worldwide, BTR thrives on some general practices which reflect several success factors in countries with advanced BTR sectors. These factors are grouped and discussed in this article.
One important consideration for the advancement of BTR is the various sources of finance. BTR has attracted private finance from institutional investors such as pension funds, private equity funds, and developers [
61,
65]. Not-for-profit organisations are also switching to profit-oriented motives by including private investments in the private rental sector [
68]. Given the growing research on the factors that will transform BTR, the perspective of Australia young adults is essential. Abidoye et al. [
8] identified and ranked 32 CSFs for BTR from a review of peer-reviewed articles. Eleven of these factors were identified as prominent based on their normalised scores and are presented in
Table 1.
From the foregoing, the Australian BTR industry is nascent [
30]. There is gradual improvement and efforts from the government and investors to advance the BTR housing industry. This study examines the CSFs from the point of view of young Australians.
5. Conclusions
This study assessed the CSFs of the BTR housing model from the perspectives of young adults in Australia, motivated by growing housing affordability concerns among this demographic. With young adults consistently being priced out of homeownership, BTR has emerged as a promising avenue to tackle the issue. However, unlike countries like the UK and the US where BTR is gaining ground, it is still relatively new in Australia. The perspectives of young adults are particularly crucial for shaping government policies and interventions to ensure the long-term success of BTR. We adopted an online questionnaire survey, targeting citizens and permanent residents of Australia aged between 18 and 34. Statistical analyses were then conducted using SPSS software, encompassing three dimensions of interest: an ANOVA to examine variations across different groups, an EFA to identify patterns among the 32 identified CSFs, and a RII to rank the CSFs based on their perceived importance.
The core findings of this study shed light on the awareness levels and perceptions of young Australians regarding the CSFs in BTR housing. A significant proportion of respondents had a low awareness of the BTR asset class, with 51.5% being completely unaware and 27.3% only somewhat aware. This lack of awareness among young adults, who represent a substantial potential market for BTR, is concerning. Moreover, it indicates a potential disconnect between the housing needs of young Australians and the practicality of the available solutions. Efforts should be made to increase awareness among young Australians, enabling them to consider BTR as a viable and affordable housing choice. We also identified varying opinions on the perceived importance of the CSFs across different groups. Younger respondents (18–24) assigned a higher importance to the public awareness of housing reforms, indicating their recognition of the role of awareness in driving positive change. This underscores the necessity for focused initiatives aimed at augmenting public awareness and engagement specifically among this age group, given their heightened levels of concern regarding an active involvement in the development process. Additionally, participants’ annual salaries and homeownership statuses influenced their perceptions. Higher earners prioritised affordability, reflecting the discourse around rental costs, while renters expressed concerns about housing taxes. Those living with parents/relatives placed a greater importance on the state of the country’s economy and alternative financing models. Overall, these findings emphasise the need for tailored approaches to address the diverse perspectives of different demographic groups within the context of the BTR housing model.
Our findings also have several practical implications for the successful implementation of BTR housing among young adults in Australia. First, raising awareness about BTR as a viable housing option is crucial to alleviate housing stress, by effectively communicating its benefits and unique features, such as long-term rental security and professional management. Second, considering individual factors, such as salary and homeownership status, is essential in tailoring BTR offerings to meet the specific needs and financial capacities of young adults in different socioeconomic groups. Customised rental pricing structures and flexible financial arrangements can help accommodate their varying circumstances. Additionally, emphasising involvement and community engagement is key to attracting young adults to BTR. Providing opportunities for active participation, such as co-design or community consultation, could enhance the sense of ownership and belonging. Last, addressing affordability concerns is critical to increasing the uptake of BTR among young Australians. Financial interventions, such as rent subsidies or government incentives, can make the BTR housing model more financially accessible and appealing to this demographic.
Although our findings provide valuable insights into the CSFs of the BTR housing model from the perspectives of young adults in Australia, it is important to acknowledge its limitations. Firstly, the study’s sample size of 33 participants is relatively small. However, it is worth noting that such sample sizes are common in other built environment research studies. Moreover, the focus of this study was not to generalise the findings across all demographic groups, but rather to highlight the pertinent issues from the specific viewpoints of young adults. Nonetheless, future studies could benefit from larger sample sizes to enhance the robustness and generalisability of the findings. Also, to ensure the long-term success of the BTR housing model, it is crucial for future research to consider the perspectives of all stakeholders involved, including investors, developers, policymakers, and community members. By incorporating a broader range of perspectives, a more comprehensive understanding of the complex dynamics and challenges surrounding the BTR housing model can be achieved. Finally, previous studies have highlighted the importance of factors such as affordability, location, and amenities in the success of BTR projects. While this study provided valuable insights from the perspective of young adults, future research should build upon existing knowledge and explore additional factors to further enrich the understanding of BTR’s potential and limitations.