Population movements are one of the key reasons house prices rise and fall, and according to Herron Todd White, it’s not just about how how many people are moving to or from your city, but also the demographics of those people.
The leading Australian valuer has studied the impact that the current population trends have been having in our major capital cities in their latest monthly report and what areas are set to be the big winners from the population moves.
City is a market that is largely being driven by overseas migration. It’s one of the most desirable locations for overseas immigrants due to employment opportunities, education facilities and other services, and the opportunity to move into an area with a population of similar nationality or culture.
Sydney’s property prices have been rebounding recently and there are some areas that HTW believe are seeing strong population inflows include, Cobbitty/Leppington, Riverstone/Marsden Park, Rouse Hill/Beaumont Hills, Kellyville and Elderslie/Harrington Park.
While overseas migration remains strong into Sydney, property prices will likely remain solid as demand will continue to outstrip supply.
Melbourne has strong population growth similar to Sydney and is a desirable location for many of the same reason.
However, it is the outer suburbs that have been experiencing significant growth. Population movement in the outer suburbs has changed drastically over the past five years. In suburbs such as Craigieburn, population growth has increased by 53.4 per cent, compared to areas like Fitzroy, that has grown at only 11 per cent.
Affordability is a key factor attracting home buyers to the developing suburbs of Melbourne. With metropolitan Melbourne’s median house price at $785,000, there are still several suburbs in the west where buyers can get a foot in the door for under $400,000.
The municipalities of Boroondara, Manningham and Maroondah had their largest growth in migration between 2011 and 2016 from overseas.
The net interstate migration in Brisbane has been steadily rising from 15,000 in 2016 to just under 24,000 in 2018. The next lot of results in 2019 are expected to be even higher.
This suggests things are starting to improve in Brisbane and across Queensland since the fallout from the GFC and the widespread flooding that severely slowed things down.
HTM are quietly confident about what lies in store for Brisbane in the coming years. With many people leaving more expensive areas such as Sydney and moving to Queensland, it is expected that we will see property prices strengthen in the years to come.
From 2017 to 2018, Adelaide recorded a population growth rate of 0.8 per cent. This rate is the second lowest of all major capitals and below the national average of 1.9 per cent. The major driver of South Australia’s population increase is overseas migration which accounted for 60 per cent of the population growth from 2017 to 2018.
South Australia has historically had negative interstate migration, referred to locally as the brain drain. This phrase refers to higher-educated millennials leaving the state to seek out increased opportunities.
According to the Australian Bureau of Statistics, in 2016 to 2017, the top five suburbs for population growth in South Australia were the outer northern suburbs of Munno Para West and Angle Vale, the north-eastern pocket of Northgate, Oakden and Gilles Plains, the outer southern suburb of Seaford, the Adelaide CBD and the outer south-eastern suburb of Mount Barker.
WA has had a rough five years in terms of both population flows and its impact on house prices. During the glory days of the mining boom, population numbers were dramatically rising and dragging up the price of homes both in terms of their values and rents.
That all changed around 2015 and since that time, both NOM and NIM have both fallen away dramatically.
There is some good news for WA, with the rate of population decline slowly coming to an end. This is also somewhat of a lagging indicator and there are indications that some areas of the mining industry are picking up which has the potential to translate into more jobs and more population inflows.
Darwin was the only capital city that experienced a population decline in 2017/18 – apparently the first time in 15 years.
The wind down of the Inpex gas project, which saw about 9,000 workers during its peak, was one of the leading causes and why prices have dramatically fallen away. Like Perth, much of the population flows will be linked to future mining projects.
The ACT population has continued to grow from 2018 to 2019 with growth of 1.23 per cent to 419,200 as at 31 March 2019. The ACT has one of the fastest growing populations in Australia and is expected to hit 500,000 by 2030.
The age of those moving to Canberra is also a factor worth noting. The high number of people aged between 20-39 could explain the high demand for entry level products in the ACT market, which are popular among this age bracket given the generally lower budgets.
Tasmania is enjoying steady population growth of 1.24 per cent – a far cry from 2012 when the population actually shrank by 0.57 per cent.
One of the key reasons for this is a stronger economy. Tasmania is now ranked third in the Commsec State of the States. Good tourism numbers, building activity, real estate activity and general confidence have created an environment in which businesses are having the confidence to invest and expand.
Tasmania is also seeing a combination of both NIS and NOS based on its cooler climate and the perception that it is green and clean.