This Missive I want to cover Queensland's improving population growth and its potential impact of property values.
There are four charts this post to help me explain to you what I think is going on.
But before we get into them lets quickly summarise where things are at when it comes to population growth.
- Australia's annual population growth is rising and currently growing by just under 400,000 per annum
- Three-fifths of this growth is due to net overseas migration
- Some 270,000 or two-thirds of this growth is taking place in NSW and Victoria
- Queensland's annual population growth is now 81,000, up from 58,000 in 2015 - so a big improvement
Talk has now turned to it being Queensland's turn to enjoy some serious property value appreciation as residents migrate north from Sydney and, in some instances, from Melbourne.
Many believe this to be the gospel truth.
Trying to contradict this mindset is increasingly hard.
Chart 1 shows that Queensland's net interstate migration is on the improve, up from 6,000 people in 2014 to 19,000 last year.
But it still accounts for less that 25% of the state's annual population growth. So the other components of population growth - being natural increase and net overseas migration - are really having a bigger impact.
To that end it often pays to take a wider view, so chart 2 shows total Queensland population growth - advanced by twelve months, see the black line on chart 2 - compared against annual house price growth (red line) in Brisbane.
In general there is a relationship between the two - higher population growth usually means more upward pressure on house price growth.
Yes sometimes this relationship has lapsed for a period of time but there have been valid reasons why as I have noted in chart 2 via the grey highlights.
And importantly chart 2 suggests that property values across Queensland, and in particular across the south east corner of the state, should be improving at a much faster growth rate.
See my blue highlight.
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Yet the annual growth rate remains sluggish and has even taken a backward step over recent months, despite the lift in population growth.
Yes the overbuilding of inner Brisbane apartments is having an impact but in the overall scheme of things this impact is relatively small.
Something else must be going on.
That something else is shown in Chart 3.
This chart shows that the net economic benefit per capita or head of population in Queensland is on the decline.
It is rising in both New South Wales and Victoria.
Chart 4 shows that there is a strong connection between economic benefit per head and house prices.
When we aren't all sharing in the economic spoils, local property values either flat line (as they did in the early to mid-1990s) or actually fall (like they have done in the recent past).
Because of the delay factor between economic well being and house values, the recent fall in economic benefit per head suggests that local house values, could actually fall, not rise, in the coming year ahead.
So more bums on a Queensland seat.
Yes the total rate of economic growth in Queensland has lifted of late, but this isn't being shared amongst the local residents as it has been done in the past.
In short, in Queensland, there is too many people and not enough economy.
It gets to the stage where just increasing the size of the local population isn't enough.
So whilst there is increased interest from interstate (and an overall lift in population growth), unless we see a dramatic improvement in the state's economy, more bums on seats isn't really doing the average Queenslander much good.
And this is why there is limited house price growth.