The latest population growth figures came out a week or so ago and if you are into having more people living here, then the results were positive.
And yet, despite many of my contemporaries outlining the apparent strong link between an increase in population growth and improved housing demand, I remain somewhat sceptical.
For mine, exactly how positive the recent increase in population growth will be for the Australian and Queensland housing markets is yet to be seen.
Some statistics before we go any further.
- Australia’s population grew by 331,000 people last year, up from 254,000 two years ago
- Net overseas migration has more than doubled in the last twelve months, to 71,000 over the last three months
- Queensland’s population growth has increased from 49,000 a year ago, to 76,000 this year
Now that is a big turn-around. But who exactly is moving here and are they really adding to household formation? Do they really need new dwellings or as many as the spruikers say? Are we really just adding more holes to our half empty bucket?
When looking at the Australia-wide picture, two-thirds of the recent population increase is due to an increase in overseas migration. Most of our overseas migrants come from New Zealand (30,000 per annum and up from 18,000 two years before); followed by China (20,000 pa and little change in numbers); 25,000 from Europe (up 10,000 over the last 12 months alone) and 15,000 from India (up 5,000 on 2010 figures).
For mine, it is “Struggle Street” that has largely lifted our population growth in recent years, with many escaping the economic mess in Europe; the aftermath of the Christchurch earthquake or the limitations of the overall New Zealand economy.
I don’t have any problems with this.
I am not xenophobic; it is just that the economic multiplier impact of the current migrant intake will most likely be much slower than many realise and especially in housing. They will share space; occupy every room in a house and more often than not rent rather than buy.
Eventually the housing market will improve but the recent lift in population growth just won’t be enough.
Now let’s look at what is happening in Queensland.
True, a 50% lift in the state’s population growth at first glance is a “well, fcuk me!” moment. See, it doesn’t take much to get some of us in the housing industry excited. But the initial jubilation is easily deflated when you dig a little deeper.
Some more statistics, if you please:
- Ten years ago Queensland’s population growth comprised 26% natural increase (more births than deaths); 30% net overseas and 38% net interstate migration
- Five years ago – 38% natural increase; 53% net overseas migration and 31% net interstate
- This year – 45% natural increase; 49% from overseas and just 15% from interstate
In the past, much of Queensland’s population growth came from interstate; many of them were under 40 and the vast majority looking to make a new start. They sold up in Sydney or Melbourne, moved here and bought a house (often new – as they were making a new start after all) and often started their own business. They had money in their pockets. Ahhh…those where the days!
This more immediate stimulatory impact doesn’t apply this time around. Yes, an increase in housing demand will follow on from the lift in Queensland’s population growth, but it might take years to eventuate and might also not be anywhere near as large as past multipliers would suggest.
And by the way, migration is a net result and the number of people leaving Queensland to move elsewhere in Australia remains quite high and consistent, averaging about 78,000 per annum at present. Why is this occurring? Poverty wasn’t that nice in a warm climate?
For some reason I keep hearing Goanna’s Razor’s Edge in my head.Got a letter from Davie just the other day Said livin in Queensland was not OK Can’t find the money just to pay the rent ‘nd the food and the herb – Well they’re just heaven sent
I really do wish that the Queensland property cartels would stop spruiking some illusory pending betterment (and giving themselves fictitious awards) and focus on getting the property industry to start working in the Sunshine State again.
Or maybe they are content to continue partaking in Davie’s herb?
Michael Matusik is the director of independent property advisory Matusik Property Insights and writes the Matusik Missive which is free, however, reprinting, republication or distribution of any portion of this material, or inclusion on any website, is strictly prohibited without the written permission of Matusik Property Insights and may incur a charge.
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