Strong need for more housing
The release of the 2021 Census figures confirmed the strong ongoing need and demand for housing, according to Pete Wargent, co-founder of Australia’s first national network of buyer’s agents, BuyersBuyers.
Mr Wargent said, “despite all of the pandemic travel restrictions over the past couple of years, the Census count still increased by more than two million over the five years since 2016, representing hugely robust growth in the aggregate demand for housing.”
“The Australian population has doubled over the past half-century, and a return to a population growth rate of around 1½ per cent would see us approximately doubling again over the next 50 years, to around 50 million”.
“Housing demand is relatively concentrated in Australia, and the Bureau of Statistics Census reported that 80 per cent of residents live in eastern Australia, with a resident population of 5.2 million in Greater Sydney, 4.9 million in Greater Melbourne, and 2.5 million in Greater Brisbane, respectively.”
“What is often overlooked is the strength of Australia’s demographic pyramid. Unlike many other developed countries, the targeted design and sheer strength of Australia’s immigration programme over the past two decades means that although the population is still gradually ageing over time, there is a tsunami of housing demand no sweeping through from the 25- to 40-year-old cohort” Mr Wargent said.
“The 2016 Census confirmed the coming wave of housing demand, and now it is actually happening in the 2021 figures, with Millennials growing to be as significant a cohort as the Baby Boomers.”
Figure 1 – Census count by generation
“We only have to look at the sheer weight of applications for lots when new land supply is released to see that the desire to own a home in Australia has never been higher, and indeed the home ownership rate did increase over the past five years, as we previously forecast, from 65½ per cent to 66 per cent” Mr Wargent said.
Changing housing needs
BuyersBuyers CEO Doron Peleg said that the detailed Census figures reveal subtle demographic shifts which have increased the need for housing supply.
Mr Peleg said, “the average household size declined from 2.6 persons to 2.5 persons at the time of the 2021 Census, which largely accounts for why Australia is now entering a rental crisis as the international borders reopen to the world.”
“The Census data also revealed that there are now well over 1 million single parent families, which itself creates the need for more dwelling units” Mr Peleg said.
“Much will be made of the fact that there were over 1 million unoccupied dwellings on Census night, but in reality this represents a decline from above 11 per cent of dwelling unoccupied in 2016 – when there was a building boom in full swing – to 10 per cent in 2021.”
Figure 2 – Vacant dwelling stock on Census night
“Of course, it’s quite likely that these figures were pushed lower by the lack of ability to travel due to COVID restrictions. The reality is that as the population becomes wealthier, people like to buy more real estate, and Australia’s household net worth soared by a third through the pandemic to almost $15 trillion”
“There is very little evidence of a net oversupply of dwellings here, except in a few specific locations, as detailed in our oversupply risk reports” Mr Peleg said.
BuyersBuyers co-founder Pete Wargent said that population pressures aren’t being felt equally around the country.
Mr Wargent said, “the 2021 Census figures showed that 80 per cent of Australians lived in eastern states and territories, and there has been a marked shift towards south-east Queensland through the pandemic”.
“Net interstate migration to Queensland exploded to more than 50,000 in 2021, which is the highest we’ve ever experienced.”
Figure 3 – Net interstate migration
“So while the population of Victoria actually declined last year, Queensland has dominated with a population growth rate of 1.4 per cent, heavily focussed on south-east Queensland. The population of the Sunshine State is higher than previously had been expected, at around 5.2 million” Mr Wargent said.
“There is a lot of pressure on the available housing supply in Brisbane, the Gold Coast, and Sunshine Coast in particular.”