AUSTRALIAN POPULATION GROWTH TRENDS
According to the ABS, the population of Australia is set to double by 2075.
Based on a scenario of medium growth, Australia’s population may reach 46 million in about 58 years’ time.
Under a scenario of high growth, however, a doubling of the population could occur by 2058.
This begs the question – where are all these people going to live?
WE JUST KEEP ON GROWING.
Population growth is essential to the strength of the economy.
We need more workers to pay tax and consume goods in order to keep the wheels turning.
We also have an ageing population that needs looking after.
According to the Federal Treasury, in 2002 there were more than five people of working age to support each person over 65.
By 2042, it is estimated that there will only be 2.5 working people to support each person over 65.
In order to cope with this, the country needs to keep increasing the number of working-aged people.
Immigration is one way of doing this. But this is not a complete solution as immigrants age along with the rest of the population.
So we will always need a certain level of population growth in order to prosper as a country.
According to the ABS, the population of Australia is likely to reach between 36.8 million to 48.3 million in 2061, and grow to between 42.4 million and 70 million by 2101.
The number of people aged 65 or more is projected to double to 6.8 million by 2040.
Those aged 85 or more are projected to almost triple to 1.2 million by this time.
REGIONAL POPULATION GROWTH.
The population of Sydney has been forecast to grow 1.74 million more than its current figure, of just over 4 million, by 2036.
Melbourne and Sydney are expected to become neck and neck by 2053, with 7.9 million people each.
Perth is expected to overtake Brisbane in 2028 at 3 million people.
By 2040, Western Australia in expected to almost double in size to 4.7 million people, Queensland should reach 7.3 million and the ACT should hit 586,000.
WHAT DOES THIS MEAN FOR PROPERTY?
The more people we have, the more homes we will need.
Australia is currently short of nearly 250,000 dwellings.
The Greater Sydney Commission says Sydney will need about 725,000 extra homes over the next 20 years to cope with population growth.
UDIA claims Victoria may be short of more than 50,000 houses by 2020.
THE EFFECT OF DEMAND ON PROPERTY PRICES.
We have already seen what a decade of little construction has done to the Sydney property market. The growing population found themselves bidding higher and higher at auctions in order to secure a home. A lack of housing caused both prices and rents to go up.
While Sydney and Victoria are still short of housing, the growing population will widen the gap further. Unless construction is ramped up even more, there will still be price growth over the decades to come.
PROPERTY IS STILL AN EXCELLENT INVESTMENT VEHICLE.
Despite the predictions of price crashes that surface from time to time, property in Australia is still an excellent asset to own.
It operates in market cycles – there’s no denying that. But after it rises and falls, it tends to rise again. Holding property over the long term is the safest way to make money out of it.
Demand for housing will continue to be strong as the population grows. This means property will continue to be valuable over the long term.
By focusing on metropolitan areas that have strong population growth, property investors can continue to build capital and passive income for generations to come.