Market and Population Growth

More People
Australia’s resident population was estimated at 20,454,550, as at 09 January 2006.  Since Federation in 1901 the population has been growing at a steady rate of approximately 1.3 per cent a year through both natural increase and immigration. Over the last five years, this has equated to an increase of 240,000 new residents a year or 4,615 people per week. 

Australia’s population is expected to continue to increase by approximately 4.8 million to just over 24 million people by 2026.

Smaller Households
If current trends continue The Australian Bureau of Statistics predict that by 2026 single parent families will have increased by 63 per cent to 1,369,000, couples without children will increase 73 per cent to 3,312,000 and lone person households will increase 105 per cent to 3,693,000.  By 2026 the number of people per household is projected to drop from current rate of 2.6 to 2.2. 

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What Does This Growth Mean For Investors?
For investors high demand and insufficient supply mean increased liquidity, higher rental return and greater capital growth.
More people and smaller households translate to increased demand for housing.  To accommodate the population growth and changing household demographic The Australian Bureau of Statistics projects the number of households to grow from 7.4 million in 2001 to up to 10.8 million by 2026, equating to an additional 175, 000 residential properties to be built each year. 

Business is also a key driver of market growth in Australia.  Australian cities like Sydney, Melbourne and Brisbane are home to many regional offices of the world’s major business enterprises.  These cities are attracting more and more business every year.  Australia enjoys high levels of capital investment and employment, the resulting growth attracts more industry, creating further demand for infrastructure, commercial and residential property.

Rental demand in Australia remains strong.

  • Increasing property prices and a growing number of single parent families and lone person households has resulted in many people opting for low maintenance and affordable rental accommodation, typically close to city centers, employment, infrastructure and public amenities.   In 2000 to 2001 lone persons aged 35 or less were most likely to be renting with 66 percent of the 1.8 million opting for tenancy. Projected increases for lone person and single parent households are projected to rise 105 and 63 percent respectively by 2026.
  •  To cater for demand in 2003 to 2004 41 percent of all completions were multi-dwelling housing.  Over the past seven years the number of single dwelling houses in inner Sydney’s rental market fell from 11.5 percent in 1998 to 9.8 percent in 2005 in favour of multi-dwelling properties.  Similar patterns can be seen in Melbourne, Brisbane and Canberra.
  • Of the 7.3 million households in Australia in 2001 to 2002, 26 percent (or approximately two million households) were renting their dwellings. 77 percent of these rental properties were privately owned.
  • Nationally, rental vacancies are at their lowest levels since the late 1980’s, suggesting conditions are tight as demand outstrips supply.
  • An increase in international education has resulted in demand for international student accommodation. In New South Wales alone the number of long term arrivals has more than doubled to around 36,000.  Just under half of these people indicated education was their reason for being in Australia.

Currently building approval statistics show growth of 143,000 properties per annum.  This is 32,000 less than the expected annual demand of 175,000.

There is also a short supply of land available for development in central regions of key Australian cities.  The resulting demand is driving property prices upwards.