Something’s gotta give – Population growth

The Smartline Report – February 2016 Edition

Something’s gotta give – Population growth

Michael Matusik, Founder, Matusik Property Insights
February 2016

Overview

Australia’s population growth is slowing down.   Some think this is a good thing; others don’t. The slowdown –  good or bad – isn’t uniform.

Queensland is down, but NSW and Victoria aren’t.  Moreso, most of our capitals are attracting the lion’s share of population growth these days.   This is an accelerating trend and maybe not a good one.

Do we accept the overcrowding; increasing congestion; loss of private space and increasing cost of living, which seems to go hand in hand with modern living? Or do we aim for something different?  Less people?  Different land use patterns?  Decentralisation?  Staggered working hours and different school times/terms?

Below are four graphics, along with some commentary that might be worth digesting before we go much further.

Some observations

  • Just over 28 million are expected in live in Australia by 2026 (that’s just ten years away).  Close to four out of five of this increase – some 3.2 million people – are expected to be housed in our capitals, and mostly in Melbourne (925,000); Sydney (820,000); Perth (710,000) and Brisbane (530,000).
  • Assuming this growth eventuates, there will be a need to build some 1.72 million new homes, of which 75% or 1.3 million will be in our capitals.  The main figures are 375,000 in Melbourne; 330,000 in Sydney; 270,000 in Perth and 200,000 in Brisbane (all 2016 to 2026)
  • This growth could see 3.2 million more cars on our roads, of which 2.5 million be in our already congested capital cities.  Imagine another 720,000 more cars in Melbourne; 600,000 more in  Perth; 570,000 more in Sydney and another 420,000 driving around Brisbane.  Impossible?  Take a look at chart 4.

Something to ponder

Why are we increasingly living on top of each other?  Yes, there are some strong economic forces which conspire such (and we will revisit those in our next update), but we don’t have to do so.  We have plenty of land.  We have other options.

Productivity gains per capita appear to be declining.  More people living here is starting to produce a shrinking economy of scale.  For mine, we either go really big – and build a massive internal market – or we cut back, better use what we’ve got, and start thinking outside of the box.

1.  Annual population growth

Australia’s annual rate of population growth is slowing, as shown in Chart 1. It appears to have peaked in 2009, with an annual increase that year of 460,000 new residents.

Our annual increase for the past twelve months was just 316,000. Fewer births in more recent years, plus less net overseas migration, were the main reasons.

Chart 1 – Australia’s population growth

Chart1

Whilst our annual population growth figures are down, they are not down across the country.  There isn’t a uniform slowdown in population growth.

  1. Distribution of population growth – Australian States & Territories

Chart 2 shows a more even spread of population growth between the four major states about five years ago.

chart2

Today, much of the population growth is gravitating towards just two states – New South Wales and Victoria.

For those who like to read the numbers – NSW increased by 101,000 people last year; Victoria by 98,000; Qld by just 61,000 and WA by 35,000.

  1. Distribution of population growth # 2 – Australian capital cities

Not only are NSW and Victoria attracting more of the population heat, so too are their capital cities. Chart 3 suggests that more people will also be moving into our major urban areas (across the country) at the expense of regional areas.

Chart 3 – Share of population growth Australian capital cities

chart 3

This chart shows, for example, that Sydney holds 64% of the NSW population, yet it has attracted 80% of NSW’s population growth over the past five years and is expected to attract almost all of the state’s growth (84%) over the next decade.

4. Number of vehicles per 1,000 population – Australia

Chart 4 shows that we are still wedded to our cars. Five years ago, there were 730 registered vehicles across Australia per 1,000 residents.

Chart 4 – Number of registered vehicles per 1,000 residents

chart4

Many experts have predicted a fall in vehicle use and ownership but the figures – out in late August last year – suggest otherwise, with, on average, 765 vehicles per 1,000 people living in Australia. Whilst lower rates of vehicle ownership are present in both NSW and Victoria, their ratios still increased over the past five years.

MICHAEL MATUSIK

Michael Matusik has over 25 years of experience in real estate analysis, assistance and advice.  He is the founder of Matusik Property Insights, a Brisbane-based property consultancy firm.  You can sign up for Michael’s free weekly updates at www.matusik.com.au

 

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