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Over 300,000 reasons why demand for property is rising

In a recent blog is RP Data’s senior research analyst, Cameron Kusher gave 302,565 reasons why demand for property is increasing.

When the Australian Bureau of Statistics (ABS) released the quarterly population growth data for the December 2011 quarter it highlighted that over the 2011 calendar year, Australia’s residential population increased by 302,565 equating to a growth rate of 1.36%.

In both raw number and percentage terms the annual population increase was the strongest since the 12 months to March 2010 (313,529 and 1.44%).

On an annual basis, population growth has now increased over the past three quarters and is up 20.3% from its recent low.

Above average growth

Population growth remains at levels well above average; the 302,565 person increase in population over the year is 22.5% higher than the long-term average increase of 246,973 persons each year.

Across individual states, population growth was strongest in raw number terms in Victoria (75,425), New South Wales (70,982) and Western Australia (67,420).

In percentage terms, population growth was fastest over the year in Western Australia (2.9%) followed by the Australian Capital Territory (1.8%) and Queensland (1.5%).

Queensland growth is slowing

Perhaps most interesting is the sharp slowdown in population growth in Queensland.  Over the 12 months to December 2008, Queensland’s population grew by a nation leading 101,205 persons or by 2.4% (only Western Australia (3.4%) and Northern Territory (2.6%) recorded a stronger percentage increase in population growth).

Over the past 12 months, Queensland’s population grew by 66,493 persons (-34.3% lower than December 2008) and the rate of population growth has fallen to 1.5%.

As the graph below shows, all components of population growth have slowed but the fall away in population growth can largely be attributed to the ongoing slowdown in interstate migration and a rapid slowdown in overseas population growth which has impacted the Queensland figures.

The trends have changed significantly for interstate migration over recent years. 

New South Wales, Victoria and South Australia have, for a long time, been typically losing population to the other states and the movements have largely been into Queensland.

These trends have now largely reversed.

Although Queensland still acquired a nation-leading 9,608 residents from interstate, this was well below the 26,854 person average increase over the past 20 years.

Conversely, New South Wales still lost -16,104 residents to interstate last year however; this figure was down from a long-term average of -18,530 persons.

In the remaining states the net interstate migration compared to the long-term average was: Victoria (3,329 vs. -5,274), South Australia (-2,325 vs. -3,251) and Western Australia (8,460 vs. 2,017).

Overall this data shows that residents are showing less propensity to move interstate and the rise of Western Australia is once again linked to the strength of the mining and resources sector.

When looking at net overseas migration across the major states it is clear that overseas arrivals show a preference to live in New South Wales and Victoria (and likely Sydney and Melbourne).  Net overseas migration has certainly slowed recently as a response to a change in policy by the Federal Government however; it has started to rise once more over recent quarters.

The resources boom in Western Australia is having a noticeable affect with that state attracting more overseas migrants over the year than Queensland for the first time since 1999.

More up-to-date data relating to long-term overseas arrivals and departures suggests that the rebound in population growth is set to continue, fuelled by an ongoing surge in net long-term and permanent overseas arrivals.

The data shows that in April 2012, there were 274,060 net permanent and long-term overseas arrivals which was 35.4% higher than at the same time year.  These figures certainly indicate that population growth is likely to continue to increase substantially over the coming quarters.

What’s ahead?

With population growth once again increasing this could create more social and political issues.

Recent data released by the ABS showed that dwelling commencements continue to show no bounce despite the fact that population growth has been above the long-term average level since March 2005.  Population growth creates additional demand for housing and essential services.

Given the Federal Government has cut spending to return the Budget to surplus it is difficult to see how essential services are going to be delivered to cater to the increase in population growth.

As a result, Kusher  expects the population growth debate to become a political issue once again over the coming year.

Source RP Data

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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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