Population Growth and Property Prices - March 2022
March 10, 2022 / Written by Rich Harvey
By Guest Blogger, Mark McCrindle,
When will Australia’s population growth really take off? Or are we in for more subdued population rises for the next 30 years?
Through COVID-19, the key factors driving Australia's population growth have all fallen. The biggest factor of growth, accounting for 60% of population increase of recent decades, has been net overseas migration. However, for the first time since World War Two, the net overseas migration rate has gone into the negative over the last two years. We've had net emigration, where more people have left Australia than have arrived here.
The other factor of population growth is natural increase. The birth rate has now hit the lowest ever recorded in Australia. The fertility rate is now less than half what we had at the peak of the baby boom in 1961. The total annual births have just slipped below 300,000, for the first time in almost a decade.
It will take the rest of this decade to get back to what would have been our annual growth rate. The loss of numbers over the last few years and the slow recovery will mean our population in 2031 is now forecast to be 29 million rather than the 30 million pre-COVID forecasting.
Are the Treasury population predictions under or over-estimates? What’s your take on these?
Treasury, particularly their intergenerational report, highlights this slower growth will have an impact on GDP and will exacerbate the aging of Australia's population. While slower population growth has benefits, allowing our nation to catch up on infrastructure shortfalls and to plan the ideal population numbers for Australia, it will have economic impacts in the medium term.
Where will the largest rises in population growth occur? Which cities/ suburbs or regions and why?
Queensland is currently Australia's fastest growing state and Brisbane is our fastest growing city. This is quite a turnaround from pre-COVID, where Melbourne was the fastest and Sydney in second place. The capitals, other than Sydney and Melbourne, are seeing strong growth. But it's particularly regional growth that it is the marked change since the pandemic.
This rebalancing of our population, from the large capitals to the regions, is a trend that's here to stay that will have economic benefits as it spreads population growth.
While the regions experience economic growth, it will allow the largest cities of Sydney and Melbourne to catch up on some infrastructure and planning shortfalls before the overseas migration returns at full pace.
What will these areas look like in the future? Vertical cities (high density) or urban sprawl or hybrid outcomes?
The rise of the regions refers to regional cities rather than regional towns, therefore the future of Australia is still an urban and city-centric one, not just a capital city future.
The regions and the smaller capital cities are seeing townhouse and apartment development along with detached homes. These regional cities are replicating some of the best of our capital cities with their walkable communities, urban landscapes, cafe culture, retail hubs, and a variety of housing options.
In our larger capital cities, we're seeing changes as well, with a focus, not just on the apartment market, but a renewed vibrancy in development in the outer-ring suburbs. These areas in a work-from-home environment have seen increased demand, with people now looking to live, work and connect more locally rather than the daily commute to the CBD model that we knew prior to COVID-19.
Does population growth automatically result in rising property prices?
Property price rises generally come from housing demand exceeding supply. But that is not simply a factor of population increase, but often an inefficiency in housing supply.
This is very evident in mining towns that see volatile prices based on employment demand in the town. Even small population increases can have large house price rises, largely because there is little capacity to build new homes in the short term and, because of the population volatility, there is little appetite to do so.
The regions, with their renewed growth, have the chance to get this planning right. The best future will see the state and local governments working with the community and developers to ensure quality developments with the right infrastructure catering to a variety of household type with good quantities of supply. Such developments create their own demand, both liveability and affordability, something that we haven't got right with our reactive development models.
What should investors look for when selecting good locations?
Australians are looking for quality neighbourhoods to live in and a key factor of this is the built environment. Whether the occupants be owners or renters, we're seeing an increasing sophistication and discernment of the market. Therefore, investors should look not only at the building itself, but its place in the broader community and its future potential. Investors should consider areas with a diverse range of employment opportunities as this provides a platform for stable tenants being able to afford rents. Housing for Australians is a long-term proposition and the Australian dream of home ownership, though changing, is still strong.
About Mark McCrindle
Mark McCrindle is a social researcher with an international following. He is recognised as a thought leader in tracking emerging issues and researching social trends. Having developed his reputation across two decades as an award-winning social researcher, best-selling author and social commentator, Mark has appeared across all major television networks, radio and print media, and been twice invited to speak at TEDx. He has presented thousands of keynotes and workshops in all major industries including finance, technology, health, mining, energy and education for top global brands and organisations. His advisory, communications, and research company, McCrindle, count among its clients more than 100 of the largest companies and leading international brands.
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