Melbourne is set to become Australia’s largest city by the 2030’s according to demographer Bernard Salt.
And that’s not really that far away, is it?
If these forecasts pan out, and they are likley to be correct, they will underpin the strength of the Melbourne property market and deliver surety to investors who own property in the right locations
What’s all this about?
In a recent article in The Australian, Salt Explains that Melbourne is set to become the nation’s most populous city by the 2030’s because it can offer what Sydney cannot – access to affordable housing on the urban fringe.
According to ABS forecasts Melbourne’s population will pass the 5,000,000 mark by 2021, and due to strong population growth in the city’s West (less than 40 km from the CBD) Melbourne’s population should surpass Sydney’s in less than 20 years.
Source: The Australian
Let’s look back a little
Melbourne was the last of the mainland capital cities to be settled – in 1836.
But because of the gold rush in the 1850’s Melbourne quickly became Australia’s biggest city.
By Federation both cities were about the same size: half a million people each.
100 years later, at the end of the 20th century Sydney had 600,000 residents than Melbourne, but as you can see from the following graphic, this lead has narrowed to closer to 350,000 and is narrowing at a rate of 20,000 a year.
Assuming this trend continues, Melbourne will become Australia’s largest city at some point in the 2030s.
Source: The Australian
In the year to June 2016 Melbourne added 108,000 residents.
Historically, this is the highest population growth Melbourne has ever experienced they couldn’t all fit into the MCG!
Over the same period, Sydney added 83,000 people.
Why is Melbourne attracting more growth than Sydney?
Melbourne offers what Sydney cannot or will not offer: access to affordable housing on the urban fringe.
Melbourne planned for growth from the Kennett years resulting in the formation of a plan for five million residents at 2030 and announced in 2002.
Either way, Sydney’s lead is now closer to 350,000 but is narrowing at a rate of 20,000 a year.
If present rates were to continue Melbourne would replace Sydney as Australia’s largest city at some point in the 2030s.
Why is Melbourne growing faster than Sydney?
In the past, Melbourne was the manufacturing and union heartland of Australia.
Today it has become an important financial and educational hub creating more full-time jobs than any other city in Australia.
However, Bernard Salt puts it down to the fact that Melbourne offers affordable housing close to the city urban fringe – something that Sydney cannot.
And with the cost of Sydney housing booming, the better Melbourne looks.
Much of Melbourne’s growth is occurring to the city’s West but there is still substantial growth in Melbourne’s south-eastern corridor.
Of course this significant growth will create infrastructure and social problems, but that a good topic for another blog.
A warning for property investors!
Just because Melbourne’s population is going to grow significantly, that doesn’t mean all properties will increase in value equally – in fact they won’t.
Strong population growth doesn’t necessarily lead to capital growth.
Melbourne’s population growth at the city fringes will lead to infrastructure and transport problems, making properties in the inner and middle ring suburbs close to transport even more appealing.
If you want to take advantage of the opportunities Melbourne’s property market will offer, will be critical to own investment grade properties.
SO WHAT WILL BE YOUR NEXT STEP?
Are you going to take advantage of the property markets in 2017 or are you going to get caught by the traps ahead?
If so and you’re looking for independent advice, no one can help you quite like the independent property investment strategists at Metropole.
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