Population Growth

Thought you might find this interesting... (SOURCE RPDATA)

Australia’s population continues its rapid growth

Despite the world economic slowdown and a reduction in skilled migration, Australia’s population growth continues to surge ahead, creating unprecedented demand for Australian housing.

Over the 12 months to March 2009 Australia’s estimated population has increased by just over 439,000 residents, fuelled by continuing increases in net overseas migration and a climbing rate of ‘natural increase’ (births outweighing deaths). In raw numbers, these recent growth figures are the highest on record. In percentage terms, the growth rate of 2.1% hasn’t been this high since the baby boom. Australia’s estimated residential population now sits at almost 21.8 million persons.

Whilst the government has cut some skilled migration, other forms of migration are still powering ahead. The other primary driver of the strong net migration figure relates to the fact that far fewer residents are leaving Australia. The latest ABS data (July 2009) shows a 17.2% decline in the number of permanent residents departing for overseas over the last year.

The last year has seen 278,239 new overseas migrants (accounting for just over 63% of population increases) and 160,822 more births than deaths (approximately 37% of population growth). Based on July migration figures, people born in India accounted for the largest proportion of new settlers to Australia (12.1%), followed by people born in China (11.8%), the UK (11.4%) and New Zealand (10.9%).

On a state-by-state basis, Queensland recorded the greatest total increase in population over the last year, with a population gain of 112,666 persons. This result is slightly greater than the increase of 112,454 persons in New South Wales.

If the growth rate is expressed as a percentage of the total population, Western Australia is the clear leader with the estimated residential population increasing by 3.1%, whilst Queensland comes in second with population growth of 2.6%. At the other end of the spectrum Tasmania has recorded the slowest rate of growth at just 1.0% followed by South Australia where the population increased by 1.2% over the year.

New South Wales remains the most populous State in Australia, home to just over 7 million residents or 32.5% of the total population of the country. Combining the three largest states, New South Wales, Victoria and Queensland account for more than three quarters of the country’s population (77.4%).

It has not just been the rate of population growth over the last year which has been so impressive, Australia’s population has been ramping up for some time. Over the last five years Australia’s population has increased by almost 1.7 million persons at a rate of 1.7% annually over the period.

The increase in population creates additional demand for housing. The 2006 Census indicated that Australia’s average household size was 2.6 persons. Based on population growth alone and not considering other factors such as reducing household formation rates and demolitions, population growth over the last quarter of 109,765 persons would have created demand for around 42,217 new dwellings.

Despite this extra demand during the quarter, just 31,566 dwellings commenced construction. The June quarter data shows a further reduction in commencements, highlighting the disconnect between housing supply and population growth. The cumulative gap between supply and demand has been estimated to be around 200,000 dwellings and growing.

Such strong population growth should be viewed as a very positive outcome for Australia. A growing population creates more demand for our domestic products and services which in turn provides a natural stimulus to the economy.

Importantly, there are a wide variety of challenges that accompany such a strong rate of population growth. We need to see housing construction run in parallel with demand and there needs to be a Government strategy that is aligned with providing the essential services and infrastructure required by a growing population base.

Clearly these challenges are not being met: as a nation we have under built and housing is now critically under supplied. The flow on affect from this under supply will mean consistent upwards pressure on housing prices and rental rates which will lead to further issues associated with housing and rental affordability.
when will this constant barrage of stats show up in either a huge run up in cap prices or yields?? and no I don't believe that dossing on your mums lounge will avoid the inevitable. it just seems strange that these stats aren't producing a spike... or are we at the beginning of it now?

The imbalances are there, its just that the macro-economic picture is still uncertain. People are aware of the imbalance and the potential run up in property prices or rents but they're also still aware of the big risk to employment and the global economy so are sitting on their hands for a while.

As soon as economic security returns, expect it to translate into spiking prices and/or yields. Those with good job security will do well in years to come if they purchase quality residences in the current environment for a realistic or even opportunistic price.

This is the murky floor time in the market while its all still "bear market" and doom and gloom. I give it another 12-18 months or maybe a tad longer depending what happens in the US, before the resi market here takes off. It could happen sooner if the global reserve banks pull a rabbit out of their collective hats, but the conditions are ripe for prolonged positive results.

I'm just going to be patient and continue to hold my current portfolio and extend it where appropriate. Its cheap to do so at the moment given high resi yields and low discount variable rates. Low risk accumulate phase...

The problem is not enough building, the building sector is already much higher part of gdp then most other developed nations, you don't want to have the gdp even more dependent on building industry (like Spai for example). The problem is immigration that is getting beyond any sustainable level and will be impossible to provide enough jobs growth. There will be huge costs in the long term to keep our cities livable with new transport systems.
In any case RP data comparing pupulation number with dwelling commencement is pretty much the best comparison they can get to prove their point, the commencement during the GFC in full swing is not very reliable data. Also I don't know why they didn't overlay home prices (log scale) with their chart (the last one), would be interesting to see how home prices reacted to low commencement volume and high immigration number in the past.
Anyhow, it is worth consider this chart from HIA to see a more leading data of new home sales and dwelling approval in the last few months.
090924 new home sales.jpg
(commencement will be back up in the next release).
In my opinion the home prices already reflect in full the eventual imbalance of population number/dwelling numbers.
kudos for the thread.

it's good to see what we all know is happening, eventuating in hard data as well.

did i hear there's currently 200 people per week entering WA on the radio last week?

where the f_ are they going?
did i hear there's currently 200 people per week entering WA on the radio last week?

Ross Gittins seems to think WA is on a winner, not that we didn't know that already...

Easing back from the emergency rate low

Ross Gittins said:
Looking further down the track, what do we see? The resources boom coming back in full swing. It's clear there's more investment in new coal and iron-ore production capacity to come, plus huge investment in liquefied natural gas facilities.

The gas has been discovered, the long-term sales contracts have been signed (this time with price adjustment clauses) and now we have to build the facilities and eventually start exporting the stuff.

This investment phase could run for another five to seven years. It will take us back to a booming West Australian (and to a lesser extent, Queensland) economy, with a return to the pressures for labour and other resources to shift from other states.

Same old, same old. Just now the GFC is behind us and the commodities boom can return to full swing. There's a finite amount of stuff in the ground and finite capacity to process it each year to a saleable state. There's also an exploding demand for said product from an industrialising India and China. Whichever way you look at it, Australia (and WA in particular) stand to do very well over the coming decade.

The Department of Immigration changed the rules a couple of weeks ago.

If an immigrant is not sponsored by a State or company or their occupation is not in a critical demand (medicine, teaching, engineering, IT, accountancy and some building trades) then it'll take about three years to get a visa.

I suspect that will reduce inward immigration.
conversely we have the WA Premier stating his concerns about a huge skills crisis and wanting to open the gates for chinese workers. the govt will stuff up IRs and thus housing supply (tho our monopolising banks are at the same trough for that one) and the govt will stuff up immigration. Huge opportunities are presenting themselves...