Here are some interesting Australian property facts you should know.
They’ll come in useful when the property pessimists, who are out once again now that our property markets have made up all the ground they lost in 2022, get into your ear:
The combined value of residential real estate in Australia rose to $10.2 trillion at the end of October, up from from $10.1 trillion in the previous month and $10 trillion the month before.
That's almost 3 times as valuable as all the stocks listed on the Australian Stock Exchange combined.
The total outstanding mortgage debt on these houses is $2.2 trillion - meaning the overall Loan to Value Ratio for all Australian residential properties is around 22%.
Now that’s not as bad as many people make out, is it?
Remember there are many properties in Australia with no mortgage debt against them at all - nearly half of Australian homeowners have paid off their mortgage.
The fact is...residential real estate underpins Australia's wealth.
It's no secret that the Australian housing market has faced its fair share of challenges over the past couple of years.
From the economic fallout of the COVID-19 pandemic to 13 interest rate rises, the lowest level of consumer confidence in decades and a continuous conveyor belt of negative messages in the media and tightening of lending restrictions, our property markets have faced considerable headwinds.
And despite some commentators predicting property prices would plummet by 15, 20 or even 30 per cent based on rising interest rates, the Australian property markets have shown remarkable resilience and have now turned the corner.
It is now clear that our housing market has defied the many doomsday forecasts made a year ago and has moved through the bottom of the cyclical downturn early in 2023 the price upturn is now firmly entrenched with home prices hitting fresh record highs in many markets in October
Currently, the population is around 26.8 million people, in 1970 it was 12.5 million.
In 1901, the population was 3.77 million.
Australia’s population is forecast to grow to 29 million people by the end of this decade and Australia has a "business plan" to grow to 40 million people by mid-century.
Given the speed at which Australia's population is growing, we're just not building enough dwellings meaning there is no end in sight to rising house prices and rentals.
March quarter data showed that Australia’s population rose by 563,000 or 2.2% over 12 months, with 454,000 of that coming from immigration.
Permanent and long-term arrival data up to July suggest that the surge in immigration is continuing and we are on track for net immigration of 500,000 or more in the last financial year.
This would take population growth to 2.5% in 2022-23, its fastest since the 1950s.
In August, the National Cabinet decided "to build 1.2 million homes in the next five years."
Of course, the government is not going to build them - private builders and developers will need to and currently, we're not building enough to hit that goal.
To meet the 1.2 million goal, we need to increase our pace of building by almost 40% from where it currently stands.
- Also read:This week’s Australian Property Market Update – Latest Data, State by State November 28th, 2023
- Also read:Latest property price forecasts for 2023 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:The Boom and Bust of our Property Cycles: A Journey Through the Investor’s Mind
- Also read:The 10 Safest Cities to Live in Australia
- Also read:Everything you need to know about the state of Australia’s property markets in 20 charts – November 2023
And even if we do somehow manage to build that many properties, it won't make up for the current shortfall in housing.
It has been suggested that on the current estimated annual growth of close to 600,000 people per year (both natural increase and net overseas migration), the new residents will simply absorb the 1.2 million homes based on an average of 2.49 people per household.
While the average household earns just over $116,000 per annum, the top 20% of households earn more than twice this (more than $280,000) and the bottom 20% of Aussies take home around one-fifth of the average (a little over $24,000).
This means that while the bottom fifth of households take home just 4% of all income, the top fifth gets almost half (48%).
And wealth is even more unevenly distributed... with the wealthiest Australian 20% of Australians owning 80 times more than the lowest 20% of Aussies
Prior to Covid, Australia was one of the fastest-growing developed nations in the world, growing at 1.4% per annum and adding up to 400,000 each year.
Then of course our borders closed, but with their reopening, there is a flood of people wanting to make Australia home once again and we're experiencing record population growth.
Historically, more people migrate to Australia than migrate away each year, meaning overseas migration has been a significant source of population gain for Australia rather than loss.
Overseas migration data in Australia shows a pattern of variability over time, due to the ever-changing global and domestic factors affecting migration.
The impact of the COVID-19 pandemic and international travel restrictions added to this variability, as did the easing of these international travel restrictions from late 2021 which has resulted in people being able to migrate to Australia again.
Components of annual population change:
- In the year ending 31 March 2023, natural increase:
- was 108,800 people
- decreased by 24,700 people (18.5%) since the previous year
- In the year ending 31 March 2023, net overseas migration:
- was 454,400 people
- increased by 362,500 people since the previous year
Australia’s population is ageing due to increasing life expectancy and declining fertility rates.
The number of people at the older ages is growing and older people are representing an increasing share of the total population.
Within a decade it is likely we will have more people aged over 65 than under 18 for the first time in history.
This is another reason Australia must "import" overseas migrants – to take the place of many baby boomers who are going to slowly leave the workforce
- On 30 June 2020, there were an estimated 4.2 million older Australians (aged 65 and over) with older people comprising 16% of the total Australian population (ABS 2020b).
- The number of older Australians has increased from 1.0 million (8.3% of the total population) in 1970 and 2.1 million (12%) in 1995 (Figure 1.1) (ABS 2019).
- The number and percentage of older Australians is expected to continue to grow. By 2066, it is projected that older people in Australia will make up between 21% and 23% of the total population (ABS 2018).
- For those aged 85 and over, the proportion has increased from 0.5% (63,200) in 1970 to 1.1% (190,400) in 1995, to 2.1% at 30 June 2020 (528,000). The proportion is expected to continue to rise to between 3.6% and 4.4% in 2066 (ABS 2018, 2020a).
Despite our aging population, currently, there are more Australians born after 1980 than before it.
This means Gen Y (born from 1980 to 1994), Gen Z (born from 1995 to 2009) and Gen Alpha (born after 2010) comprise more than half of Australia’s population.
Currently, Gen Y and Gen Z comprise the majority of the workforce, outnumbering Gen X and the Baby Boomers for the first time.
Understanding our demographic changes critical for successful property investing moving forward, but that's always been the case.
The long-term trends of how many of us there are, how we want to live and where we want to live well over the long-term be more important than the many short-term factors affecting our property markets.