More analysis of population growth and housing supply

Over the last few years we have consistently seen that Australia’s population has been growing strongly with more migrants and an improving birth rate resulting in a jump in natural increase (total births minus total deaths).  During the 12 months to June 2009 we have witnessed a slowdown in the rate of population growth, largely fuelled by a slowdown during the last quarter.  The data shows that on an annual basis migration is still growing strongly however, over the quarter it dropped significantly from 96,611 overseas migrants in the March quarter to 58,145 migrants during the June quarter.  Natural increase also fell duing the June quarter, but only slightly from 38,519 in March to 37,658 in June.  The level of natural increase has been falling for three successive quarters now.  The graph below shows the components of quarterly population growth on an annual average basis and you can see that even on annualised basis the slowdown in migration and natural increase is evident.

Components of National Population Growth

Population Growth

 It is interesting to delve a little deeper and look specifically at the migration numbers which are published on a monthly basis by the Australian Bureau of Statistics.

The graph below details the number of permanent settler arrivals, or ‘migrants’ arriving on a monthly basis.

Number of permanent Settler Arrivals

Permanent settler arrivals

As the graph shows results are quite volatile on a month-to-month basis however, both the monthly and 12 month average results show that migration rates are falling.  Importantly, migration rates have been siting at well above long term average levels and at some of the greatest rates seen during the last 40 years.  Therefore, on a historical basis population growth is still exceptionally strong although it has abated somewhat in recent months.

 It’s also imperative to look at what is happening on the other side of the equation, how many people are leaving Australia long-term?

Long term resident departures

Resident departures

Although the number of migrants may be reducing, a lot fewer residents are leaving Australia to move overseas long term.  In fact before the recent fall in November 2008 there had been an average of  8,479 residents leaving Australia long-term per month over the last year.  As at October 2009, the last 12 months had seen an average of 6,405 long-term resident departures per month which is a fall of -24.5%.  In comparison, during February 2009 the 12 month average for permanent arrivals was 13,609/month, as at October 2009 the average is recorded at 12,673/month a fall of -6.9%.

These results are no real surprise given the relative strength of the Australian Economy and the relatively low jobless rate in the country.  The data also shows that arrivals are almost double that of departure thus, our population continues to see strong levels of growth.

Now I’m sure everyone has heard the arguement of the disconnect between dwelling approvals / commencement  and population growth so we won’t delve in to it again at the moment.  What we have  seen is that many commentators including the Governor of the Reserve Bank of Australia point to the fact that it is imperative that we see more supply of stock and there are some encouraging early signs.

Finance commitment for construction of new dwellings

Commitments - construction of new

 

Finance commitment for purchase of new dwellings

Commitments - purchase of new

 

Both charts above should be seen as encouraging for everyone.  In recent months we have shown signs of  adding to our dwelling numbers with finance commitments for construction of new dwellings and purchase of new dwellings both increasing.  In fact, the constuction finance is very encouraging after levels had virtually flatlined since 2003.  Let’s hope this trend continues as it will benefit the entire community providing much needed accommodation for our growing population and should it continue it will help ease upwards pressure on property prices.

Of course Governments of all levels could greatly assist with the continued delivery of new product through measures such as: cutting bureacratic red tape on new development, improving infrastructure and amenity in areas where new housing can be delivered and reducing the significant costs for developers associated with applying for and developing new houses, units and land.  All of these measures would likely assist in making new product more affordable and more appealing from a sales perspective, surely this is important as our population continues to grow albeit at perhaps a slightly lower rate than seen recently.

Cameron Kusher

About Tim Lawless

Tim heads up the RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia

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2 Responses to More analysis of population growth and housing supply

  1. Graeme Freer January 11, 2010 at 10:18 am #

    With population growth coming off historic peaks only slightly, pressure should be maintained for improved transport and infrastructure delivery, as you say, Cameron. ANZ and Westpac banks are estimating the current housing shortfall at 200,000 dwellings. This combined with the predicted near doubling of mortgage defaults to 40,000 by the end of 2010 will likely create buying opportunities for opportunistic investors.

  2. Jeremy September 27, 2013 at 5:50 pm #

    Hey Cameron,

    You mentioned…

    “Now I’m sure everyone has heard the arguement of the disconnect between dwelling approvals / commencement and population growth so we won’t delve in to it again at the moment”.

    Could you just briefly summarise this please?

    Cheers,
    jeremy.

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