What’s Going On with Australia’s Population Growth?
Despite encouraging signs for the property market since the federal election, the biggest boost to the industry could be Australia's surging population.
According to the latest figures released by the Australian Bureau of Statistics, Australia's population grew by 1.6 per cent during 2018 reaching 25.2 million people.
The number of births in 2018 reached an all time high of 314,900 while net overseas migration accounted for 248,500 people, still below the peak of 315,700 recorded in calendar year 2008.
Victoria continues to swell, with its population growth at 2.18 per cent. By contrast, population growth in South Australia and Western Australia was 0.8 per cent and 0.9 per cent respectively in the 2018 calendar year.
Under ABS projections, Australia’s population could hit 30 million by 2029, with Melbourne also tipped to overtake Sydney as the nation’s largest city around 2050.
New South Wales would remain the largest state with a population of between 9 million and 9.3 million in 2027 yet growth would be fastest in Victoria, hitting 7-8 million by 2027.
In 2050, Melbourne would is expected to reach 8.5 million while Sydney’s population would have hit 8.3 million.
The ABS said Queensland’s population would increase to 6 million in 2027, Western Australia would reach 3 million, and growth would be slowest in South Australia, where the population would stand at 2 million.
Continued population growth, along with insufficient investment in new housing stock, could leave Australia in an all-too-familiar situation of under-supply in years to come.
Population upturn, construction downturn
While the RBA's cut to interest rates along with news the prudential regulator has proposed easing the mortgage interest rate floor have seen wholesale market funding conditions improve, the weakening of the Australian dollar along with housing affordability and credit demand continue to feed the housing downturn.
A decline in both home and apartment building activity and a shrinkage in mortgage loan commitments to the investor buyers whose purchases underpin much of the construction of housing stock, looks set the continue for the foreseeable future.
The most recent Australian Industry Group Housing Industry Association Australian Performance of Construction Index (PCI) also revealed that home-building declined for a 10th month, as new orders — a leading indicator of activity contracted further.
Activity in the apartment sector contracted for 20 of the past 22 months, while the commercial sector — which includes office towers and warehouses — also continues to be a drag on the index.
ABS figures also showed loans to home-buying investors contracted for a ninth straight month after peaking at $8.5 billion in January 2017.
Last year around 50,000 construction jobs were shed. Construction index figures point to another 9,000 being lost in the first three months of 2019.
The housing market slump, that has so far pushed Sydney prices down 14.9 per cent from their mid-2017 peak and Melbourne prices down 11.1 per cent from their highest point, has continued to hit the pipeline for new home-building hard.
