302,565 reasons why demand for housing is rising

Quarterly population growth data was released earlier this week by the Australian Bureau of Statistics (ABS) for the December 2011 quarter.  The data 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.  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%).

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.

With population growth once again increasing this could create more social and political issues.  Data released by the ABS this week 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, I would expect the population growth debate to become a political issue once again over the coming year.



About Cameron Kusher

Cameron Kusher is Head of Research at CoreLogic, specialising in primary and secondary data analysis, property market commentary and consultancy. Cameron has a thorough understanding of the fundamentals such as demographics, trends, economics and spacial analysis and is a regular keynote speaker for property-related groups, regulated industry bodies, corporations and the government sectors. Follow Cameron on Twitter @cmkusher

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8 Responses to 302,565 reasons why demand for housing is rising

  1. Pauk June 23, 2012 at 3:53 pm #

    Population growth and house prices? Age and the number of people at that are are the number 1 driver.

  2. Pauk June 23, 2012 at 3:56 pm #

    What do you think is the number 1 driver of demand?

    People and how old they are. Simple


    1301.0 – Year Book Australia, 2002


  3. arun madhoji June 27, 2012 at 1:51 pm #

    Demographic impact on property prices.
    Each generation moving out and buying or renting have had an impact on property prices .In fact the boom actually coincides with the mass exodus as per my analysis below;

    Baby boomers has around 3-4 children .Gen X 2-3 .However to compensate there are a lot of single mums .
    Boomers who are the new teenagers are more healthy and have a longer lifespan and remarry if divorced or widowed via RSVP and will also not retire until say 65-75 and also will go to retirement village as a last resort.This is proven by the number of retirement villages going into receivership due to low occupancy rates.
    Boomer A will be entering retirement home around 75-80
    Boomer B-at 2035-2040

    Boomer A-born 1946-1954
    married early around 22- 25
    Children at 25
    1972-78 boom
    Children -Gen X born 1975-80
    Married 28-30(married later dur to 1990 recession)
    Result 2000-2005 boom

    Boomer B-born 1955-1962
    married around 24- 27
    Children around 27
    1983-88 boom(7 years later -thus the reason they used to say property prices doubles every 7 years)
    Children -Gen Y born 1980-88
    Will be turning 28 around 2013 as females will want to have kids before 30.-critical mass will cause property boom.

  4. Accurate Data Entry June 28, 2012 at 1:44 am #

    Yes, clearly the trend shows the increase in demand of houses.

    • demografix June 29, 2012 at 10:39 am #

      Yes, that must be why house prices are rising……not.

  5. Zetetic July 3, 2012 at 2:09 pm #

    How are we to check your assertions and how can you justify your position without some information on the number of houses being constructed in 2011?

    According to your data on a previous post:

    We have annual dwelling approvals of ~150,000 per year. If we assume 2.6 people per house then this means we built enough homes to house 390,000 people. That is 87,000 more homkes than needed in 2011. The demand for housing is not being driven by people needing houses. In fact htere is no demand inbalance. Finance commitments have fallen, stock on market is rising, the number of days on market has increased and vendor discounts are increasing. The previos demand was from investors and second home buyer looking for quick profits on in a rising market.
    Speculator driven demand, which will soon turn into a bust and a glut of houses on the market.

  6. arun madhoji July 3, 2012 at 4:08 pm #

    It is important to note that it was mainly the high end market which went exponentially up before the GFC and has dropped in value by 20%-40%.This is because investment bankers and stock brokers including those residing overseas and were getting fat bonuses pushed up the price due to the limited stock and the low dollar which was around 75c which made it appealing for those using foreign currency to buy high end property.Post GFC and with the European crisis these bankers are struggling to keep they jobs let alone the massive bonuses.
    The ABS statistics are misleading as the above distorts the real situation.My Sydney properties have actually increased in value by about 10% in the last year and I am expecting them to go up another 10% .
    What is also happening is that we are not building enough houses which is pushing up rents .It will come to a critical point when investors will come in together with the Generation Y.
    In the 1980’s the Labour Government scrapped negative gearng thus causing a drop in constructing and rents to increase.When the reversed this legislation investors came back to the market and the seond lot of Baby Boomers were also ready to buy thus the 1980’s boom.
    In the 1990’s construction activity had dropped due to the recession.When interest rates dropped around early 2000 investors came back in the market together with Gen X also ready to settle down thus the 2000’s boom.
    I believe we are heading for a similar scenario within I few years with low construction, lower interest rate, higher rents and Gen Y ready to buy very soon.
    There was a recent BIS report which also states that prices will increase in Perth by 24%, Sydney by 17% and Brisbane by 20% and Adelaide by 9% by 2015.

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