Population growth and how it impacts property investors

Sunday, 28th June 2015

Population growth is one of the key indicators we use to help determine whether an area or region looks suitable for investment. As with all indicators they should be viewed collectively before you make a decision. However, in this article we are going to focus on population growth and how it impacts property investing.

Population growth

Population growth brings new people into an area or region and this will increase the demand for housing which drives up the price of housing and often the rental yields. These are both good outcomes for property investors.

Where this growth is coming from

The Australian Bureau of Statistics Population Clock shows that we have an overall population of 23,854,419 as of June 2015 and this is increasing at a rate of one person every 1 minute and 21 seconds.

There are a number of things that make up populations growth.

The first is natural increase, which is the total amount of births less total deaths.

The second is NOM, which is Net Overseas Migration, which is the difference between the number of people leaving Australia and those entering.

It is the combination of life expectancy, fertility and Net Overseas Migration that shapes how our population will look 10, 20 and 50 years from now. As property investors we are interested in the composition of our population as it gives us an insight into the types of accommodation and trends that are likely to be in demand.

Another consideration we take into account is Liveability, which simply means people need to live somewhere and as population grows the demand for Liveability increases.

So where are they going?

The Australian Bureau of Statistics projection results states and territories looks at a number of scenarios regarding where growth will occur. As a summary each of the states and territories will grow over the next 50 years except Tasmania. The populations of Western Australia and Queensland are expected to more than double and the Northern Territory is likely to have above average growth as well.

This is of course a summary and we would suggest further investigation into areas you are interested in.

Population changes and how it relates to supply

Changes to population has a direct relationship with supply. As an area or region increases in population if there is a equal matching of supply then property prices and rental yields would remain the same with all other variables held still. As property investors we are looking for increases in population with supply of housing not growing at the same rate. This generally will see growth in property values and an increase in rental yields.

If you would like to know more about how population growth impacts property investment attend our upcoming seminar or contact me peter@investoproperty.com.au