Would you continue to invest in IP if population growth stopped ?

Australia has always had population increases - it's averaging more than 1%pa. It's current govt policy to encourage migration and also provide bonuses to those who have more kids.

If these policies were to change and population growth stagnated (like Japan), would you continue to invest in IP ?
Population growth, particularly the liking toward the sunshine state (Qld) is one of the main reasons I'm looking to buy more property. But if growth were to slow then it would def make me stop and reconsider..

Just saw on tv last night that our population is expected to top 22mil by the end of the year. A 1mil increase in 2yrs.. thats a growth of 2.4%/yr :eek:
There would have to be an awfully large population in Australia for it to become like japan ;) Cann't conceive of that happening anytime in my lifetime.

Short answer, no, I'd probably consider a different asset category.

I always look at the demand/supply situation when buying an asset and the residential property market in Australia is supported by an ever-growing population which also supports the demographic mix of the population. In this environment, a well positioned property on prime dirt can only appreciate over time as more national wealth is created and more people aspire to that dirt. Otherwise, price appreciation would be limited to inflation rate type returns to reflect the replacement cost of the residence. Or, in a declining population, the value of the dirt depreciates as populations move away. Look at the Michigan type example.

So long as our country is growing economically by virtue of our geographic positioning in the Asia region alongside rapidly expanding nations who require our natural resources, then we will be in good shape. But you need to pay attention to the big picture as the ageing population poses a risk if coupled with slowing population growth.

Its a great asset category to invest in, but it is the demand/supply fundamentals that underpin its strength.

I certainly think I would re-assess my strategy, Australia is a large diverse country.. there would have to be some areas where there was still some sort of growth.

Whether it would be for a long term investment, or just some quick turn around stuff would obviously depend on the growth type, i.e; if growth was due to am industry boom..

I still believe people do need somewhere to live, so there is always a requirement for housing.
I think you ladies can have trouble sometime after 50 years of age :p
Not so much nowdays: there is the 65yr old brittish woman who gave birth to her first child. And there is a 72yr old brittish woman who is currently undergoing IVF so she can have her first bub. :eek: :D

Hell, we don't even need men anymore, they can now create sperm from stem cells :D
Hi all,

Simple question Keith, :rolleyes:

I consider population growth like the "core demand" side of the equasion. Population growth is a big part of "growth" and were it to stop, there would be untold other effect on the economy. For example the effect of population growth helps to nullify the changing demographics of an aging population.

In answer to the question, probably no, but that answer would probably extend to other asset classes here as well.

but demand is only one side of the coin. things would be more interesting if supply was cut. hang on... isn't that happening now???
but demand is only one side of the coin. things would be more interesting if supply was cut. hang on... isn't that happening now???
I thought there was also a trend for less people in each dwelling these days therefore more dwellings needed for the same amount of people.
I see house prices increasing to do mostly with positive sentiment rather than population increase.

For just one eg: How do areas or towns not subject to immigration (or very little) rise in price over the years?

Immigration is only a minor consideration to myself and is overrated by most as a determining factor in IP investment.
could we consider that the baby bonus is artificially propping up the population growth?:D

but seriously
I would consider the supply and demand part of the equation and if my properties were not performing the way I wanted I would definitely look at other avenues of income. I already do. I look at everything that passes my line of sight.
I would.

Even in countries with static population (eg Europe) there'd be some areas that are growing in population.

And the population would be ageing so the seniors population would still be rising in some areas.

In any event there would always be a market for renovation of homes (especially cheaper single storey units in a small block) in convenient areas with services.

On the basis of household sizes versus housing stock, we have too many houses and too few units. People (even many singles and couples) prefer houses, but they'll go for a unit when they get old. Then after that something with a caretaker and/or driver or home help.

An exodus of property investors (maybe themselves selling up when they get old) could mean cheaper homes, more owner occupiers and higher rental yields for those investors still remaining. So we could see positive cashflow - as has been the case in country towns with declining populations.

The key statistic isn't so much population growth, but the rate of household formation and the amount of money people have.

Now if one bought or formed a discount legal practice and offered free divorces in exchange for a 10 year home rental contract then one would be increasing the rate of household formation AND guaranteeing tenancies for yourself ;)
Would need to put more research into local population trends, but yes I'd still invest in property. If a cities population is 3M and steady or declining slowly - there will still be plenty of demand for the beachside and inner bluechip suburbs. In these sort after locations, demand will always exceed supply - assuming as mentioned we're talking about Japan sort of scenario and not a doomsday Detroit scenario where the cities collapsing and income will be leaving as well.
The last boom had nothing to do with population increase.

Property went up >200% in most areas across Australia - capitals, and regional towns with no population change.

Even if net resident population doesn't increase, there's always opportunity to make money from interstate migration and people wanting to be closer to work.

I'd stop investing in property if credit was tightened significantly, or there was a significant softening of the economic outlook. The cost and looseness of credit drives prices in my view.