With Australia’s population continuing to grow, a lack of available housing could be the catalyst for another boom in the property market.
The Reserve Bank of Australia governor Philip Lowe has acknowledged that lower interest rates had pushed up Sydney housing prices during the 2012 to 2017 boom.
“I think that’s pretty clear,” he acknowledged when recently addressing our federal politicians. But he went on to say there were other things that were “probably more important over the past decade’’.
“They go to population growth and the slow response to that on the supply side,” he said.
Lowe pinpointed that population growth picked up in Australia quite a lot and it took almost a decade for the rate of growth of the supply to respond to that. He added he was raising the topic in the context of the next phase in the housing market.
“Because what we’re seeing at the moment is quite strong population growth, which I think is good, but the additions to supply of the housing stock are slowing right down.
“New development is slowing down, and one of the issues we’re going to keep a very close eye on over the next little while is what the supply of housing is doing.
“If developers cannot get financed, the supply of housing will slow a lot and we will be sowing the seeds for the next upswing.”
Australia’s population stands at around 25.4 million, up 404,000 in 2018. The ABS calculates one birth every 1 minute and 40 seconds, one death every 3 minutes and 19 seconds, one person arriving to live in Australia every 56 seconds and one Australian resident leaving Australia to live overseas every 1 minute and 53 seconds, leading to an overall total population increase of one person every 1 minute and 13 seconds.
NSW’s population sits at just over eight million, up 1.6 per cent last year.
Capital city growth accounted for 79 per cent of Australia’s total population growth. The capital city with the largest increase in population was Melbourne (119,400 people), followed by Sydney (up 93,400 to around 5.2 million) and Brisbane (50,100). The fastest growing Sydney localities were around Riverstone, Marsden Park, Cobbitty, Leppington, Rouse Hill and Beaumont Hills.
Taking a look at dwelling approvals, Australia’s new housing pipeline currently is at a five-year low. The rolling yearly total sits around 199,000, official figures show. The peak was 232,000 approvals in 2015. NSW’s approvals peaked in 2017 at around 70,000.
Housing markets are not homogeneous across states and territories, or even in neighbouring suburbs. The relationships between housing markets and the broader demographic shifts are complex although conventional wisdom repeatedly does suggest house prices are primarily influenced by the factors headlined by interest rates, building supply and population growth.
