Population & Demographics fundamentals

The changes to our population and our demographics is one of the categories we carefully watch for our Quarterly Riskwise Risks and Opportunities report . Population Growth 300x224

The population & demographics category measures the overall population growth as well as its components (net overseas migration, net interstate migration and natural increase).

Population growth is a key driver in demand for residential properties by both home buyers and renters, and has a strong correlation with capital growth.

POPULATION GROWTH

Population growth provides a good indication of the likely changes in demand within a particular property market.

This assists with determining what will likely happen regarding growth and return rates for property investors.

For example, if population rates decrease, demand, and therefore returns, are likely to stagnate or decline.

A1

The growth rate for Australia is low at 1.6 per cent for the year ending 2017.

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Over the last quarter to the end of 2017, the growth rate dropped to 1.4 per cent, the lowest growth in any quarter for thirteen years.

VIC has delivered exceptional population growth which will likely bring strong longterm demand for the expanding city.

WA & NT delivered a volatile growth rate in recent years which was largely triggered by the end of the mining boom.

All other states have shown stable population growth, with NSW and QLD delivering solid growth rates over the past few years.

QLD is likely to produce high growth rates due to state-level government strategy.

NATURAL INCREASE (BIRTHS/DEATHS)

The rate of natural increase is the crude birth rate minus the crude death rate.

This rate excludes population increase from immigration and emigration.

This metric provides a strong indication of how demographic changes may impact housing demand.

A2

NSW has shown steady decline likely due to the large number of young families and couples migrating to other states or territories.

The natural increase rate is likely to fall across all states due to Australia’s ageing population.

NET MIGRATION: OVERSEAS

Net overseas migration is the net gain or loss of population through immigration to Australia and emigration from Australia.

A3

It is an important metric to anticipate property demand at the state and territory level.

Natural IncreaseNSW and VIC remain the most dominant states for attracting overseas migrants, eclipsing each of the other states and territories.

With fewer mining jobs attracting overseas workers, WA has experienced consistent net migration decline.

Traditionally, QLD has not been a destination of choice for foreign immigrants.

However, as a result of its growing economy, the state is likely to attract greater numbers of foreign migrants, creating increased demand for residential properties.

NET MIGRATION: INTERSTATE

Net interstate migration is the net gain or loss of population through the movement of people from one state or territory of usual residence to another.

It is an important component required to calculate Australia’s estimated resident population at the state and territory level.

A4

Affordability has been the key driving force behind interstate migration.

High median house prices relative to the average income in NSW is triggering net migration losses.

VIC and QLD have dramatically outperformed each of the other states and have continually been the states of choice for those already living in Australia.

You may also be interested in reading:

RISKWISE QUARTERLY RISKS & OPPORTUNITIES REPORT: QUEENSLAND’S TURN TO SHINE

RISKWISE QUARTERLY RISKS & OPPORTUNITIES REPORT: ECONOMIC FUNDAMENTALS

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About

is the CEO/Founder of RiseWise Property Review. He has more than 20 years’ experience in risk management including, Co-Founder of Peleg, Kessel & Co, an assurance and advisory accounting firm & Executive Manager at Westpac Banking Corporation in Sydney. www.riskwiseproperty.com.au/


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