Thanks to natural increase and migration
Earlier we discussed Japan, a country which is facing a future of sustained population decline. At the other end of the Pacific Rim is a country which has a booming population: Australia. According to the latest figures released by the Australian Bureau of Statistics, Australia’s population grew by 1.6 per cent in 2018 (nearly 405,000 people) and now stands at 25.2 million.
Whereas Japan’s birthrate reached a postwar nadir last year, 2018 saw the number of births in Australia hit an all-time high of nearly 315,000. This contributed to a natural population increase of 156,000 (8.5 per cent up on 2017).
At the same time, the net overseas migration figure for 2018 was 248,500 people, an increase of nearly three per cent on the year before, but still some way below the peak of nearly 316,000 people recorded in 2008. Thus, the population increase in Australia is about one-third natural increase and two-thirds net overseas migration.
This population increase was not uniform across the states: South Australia and Western Australia saw modest population increases of 0.8 per cent and 0.9 per cent respectively. The Northern Territory saw its population decline by nearly 0.5 per cent Tasmania was both below the national population average. New South Wales’ growth matched that of Australia as a whole. In contrast, Victoria’s population increased by nearly 2.2 per cent in 2018. This rapid growth, particularly in Melbourne, is set to continue and by the middle of the century Melbourne is set to overtake Sydney as Australia’s biggest city.
By 2027 it is projected that Victoria will be fast catching up with New South Wales population (8 million and 9.3 million respectively). In that same year Queensland is expected to have increased to 6 million people, Western Australia would have increased to 3 million and South Australia would hit 2 million people. By the end of the next decade Australia’s population is expected to climb past 30 million people.
This continued population growth is expected to put strain on Australia’s housing stock (along with other services and infrastructure). Interestingly however, the housing market is in the middle of a severe downturn: Sydney’s prices have declined nearly 15 percent since two years ago while Melbourne’s prices have declined over 11 percent since their peak. In 2018 the construction industry shed 50,000 jobs (another 9,000 were cut in the first quarter of 2019).
According to the most recent Australian Industry Group Housing Industry Association Australian Performance of Construction Index (PCI), home building declined for a tenth straight month. Activity in the apartment sector contracted for 20 of the past 22 months. Australian Bureau of Statistics’ figures show that loans to home buying investors contracted for a ninth straight month. The weakening Australian dollar, credit demand and housing unaffordability (despite the recent corrections in the two largest cities) have all contributed to the downturn.
Thus, at a time when Australia’s population is strongly growing, and is expected to do so for the foreseeable future, its home building industry is contracting. That cannot go on forever and demand will surely push up prices and unaffordability in the future, especially in rapidly growing Melbourne.