DEMOGRAPHICS is central to the Australian property industry. More so, I would suggest, than to the property industry in other countries. And the reason is the Australian immigration program.
For almost 70 years since the end of WWII, the demand for residential and other property has been underpinned by a strong migration program. More people translates into greater demand for property. Which is why the property and related industries should always be monitoring aggregate shifts in demand through population growth.
At the national level, the total population added over the year to June 2014 was 385,000, down about 4 per cent on the previous year’s growth of 401,000. Australia’s population growth rate peaked in the 2009 financial year at 456,000; this was about the time that the ABS recast its 2051 view of the Australian population from 28 million to 36 million, prompting the Big Australia debates.
Immediately after Kevin Rudd’s famous “I believe in a Big Australia” comment in October 2009, overseas migration wound back. This pushed net growth down to 359,000 in the 2010 financial year and to 335,000 in the 2011 financial year. In just two years a policy shift reduced this nation’s growth rate by a quarter.
But then in 2012 and 2013 the growth rate recovered, driving up demand for housing at a time when employment in other sectors was diminishing. This is why these figures are so important; they go to the heart of the momentum of demand for housing and for jobs in the building and construction industry.
In Western Australia, net overseas migration dropped 32 per cent from 53,000 to 36,000 over the 12 months to June 2014. In Queensland, net overseas migration dropped 20 per cent from 41,000 to 33,000 over the same period. Net interstate migration to Queensland remains modest at 5000 in the 2014 financial year, down from 35,000 a decade earlier. The demand for labour in the resource states is clearly diminishing.
The big surprises are in bigger states. Despite less growth at the national level over the 2014 financial year, the number of people added to NSW has jumped to 118,000, up from 103,000 the previous year. The same applies to Victoria: net growth of 111,000 is up from 104,000 the previous year. And in both cases growth is being driven not from natural increase (which is subsiding), but from net overseas migration.
Taking all of this into consideration it is not surprising that the Sydney and Melbourne housing markets have been rising. There is a surging demographic momentum in these markets being driven by rising overseas (non-Kiwi) migration. Demand is falling in the resource states, but off a high base. I suspect that Sydney and Melbourne will remain property hot spots for as long as the momentum of overseas migration continues to rise in these cities.
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