{"id":5832,"date":"2015-09-21T01:00:43","date_gmt":"2015-09-20T15:00:43","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=5832"},"modified":"2015-09-21T01:00:43","modified_gmt":"2015-09-20T15:00:43","slug":"why-it-is-not-really-population-growth-that-predicts-property-demand","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/why-it-is-not-really-population-growth-that-predicts-property-demand\/","title":{"rendered":"Why it is not really population growth that predicts property demand – Michael Yardney"},"content":{"rendered":"

 
\nApparently, one baby is born every minute and 45 seconds. Sadly, someone dies every three and a half minutes, and the net gain from overseas is one migrant every two minutes. This results in an overall population increase of one person in every minute and 18 seconds. By the time you finish listening to this interview, there will be another four or five people living in Australia.\u00a0In today’s show\u00a0Michael Yardney<\/strong><\/a>,\u00a0from Metropole Property Strategists, tells us why he believes it is <\/b>not really population growth that predicts property demand.
\n <\/p>\n

Transcript:<\/strong><\/h4>\n

Kevin:\u00a0<\/b> There has been a lot written about Australia\u2019s strong population growth and how there\u2019s likely to be twice as many of us in the next 40 or 50 years. That\u2019s a frightening thought.
\nApparently, one baby is born every minute and 45 seconds. Sadly, someone dies every three and a half minutes, and the net gain from overseas is one migrant every two minutes. This results in an overall population increase of one person in every minute and 18 seconds. By the time you finish listening to this interview, there will be another four or five people living in Australia.
\nMichael Yardney joins me from Metropole Property Strategists. Michael, you\u2019ve been looking at this. What\u2019s happening with Australia\u2019s population?
\nMichael:\u00a0<\/b> Kevin, thanks. Population is being measured, and a lot of people who are interested in property want to understand what\u2019s going to happen to that population to understand what we need for property. But I\u2019m going to suggest it\u2019s not just population growth, but we also have to be aware of household formation \u2013 how many households we\u2019re forming.
\nCurrently our population, it\u2019s just under 23.9 million people, and it\u2019s projected to increase by 2036 \u2013 Kevin, that\u2019s not that far away \u2013 to 32.5 million people. The other thing, of course, is our median age is going to go up. We\u2019re going to be older in 2036. The median age is going to be about 40 years of age or so, compared to 37 years of age now.
\nThe other big thing, of course, is that the proportion of older people, people over 65 years, is going to be higher, as well. This means that we\u2019re going to have more people living on their own in the future.
\nKevin:\u00a0<\/b> You said 23.9 million. How many houses are there in Australia and how many people per household?
\nMichael:\u00a0<\/b> There are currently 9.2 million households, and the average size is 2.58 people per household.
\nKevin:\u00a0<\/b> With that population growth, Michael, how many dwellings are we\u2019re going to need?
\nMichael:\u00a0<\/b> In the past, we have been building about 164,000 dwellings per year. It is suggested in the five years ahead of us to 2021, our strong population growth underpinned by the migration is going to require 172,000 homes. Forget the population growth \u2013 172,000 households. That\u2019s about a 5% increase in demand in the next five years compared to the last five years.
\nKevin:\u00a0<\/b> I guess I could ask you questions about whether we\u2019re going to be able to meet that, but I guess we have to.
\nWhat does it mean? What are the households going to look like?
\nMichael:\u00a0<\/b> There are going to be fewer people living in the traditional family home, mom and dad and kids. While, of course, there are going to be more of them, the percentage is going to decrease a little bit. Over the timeframe, single-person households are expected to increase by 24% from 2.1 million to 2.5 million single-person households in the next five years.
\nKevin:\u00a0<\/b> Does that mean that we\u2019re probably going to be building more apartments? I think we can obviously fit more apartments on the land mass.
\nMichael:\u00a0<\/b> Sure, Kevin. More of us are going to want to live in apartments, but we\u2019re also going to need lots more houses. The number of people living in traditional houses is going to increase by about 770,000 over the next decade or so, but the number of single-person households and two-person households is going to increase proportionately more.
\nNot all two-person households want to live in apartments. Currently, there are 10 million people living as couples in 5 million dwellings in Australia. They come from both ends of the spectrum, Kevin. DINKS (dual income, no kids) \u2013 a bit like you and me \u2013 and some are going to have kids in the future. But others are actually older empty-nesters \u2013 I guess like you and I. Interestingly, these empty-nesters, the older ones, are predicted to grow by 14% over the next decade.
\nWe have to understand what sort of accommodation is going to be in strong demand in the future, because while this is important for the building industry, it\u2019s really important for investors because we want to own the sort of property that is going to be going up in value because other people \u2013 owner-occupiers \u2013 are going to want to buy them.
\nKevin:\u00a0<\/b> What does this mean for property investors?
\nMichael:\u00a0<\/b> As I say, demographics I think are going to drive our markets \u2013 how we live, where we want to live, the way we want to live. Over the next decade, in my mind, this is going to be more important than the ups and downs of the economy or the fluctuations in interest rates. They\u2019re going to come and go, but the big driver is how and where we want to live.
\nI think a growing affluent population whose housing requirements are slowly changing is going to underpin our property markets. That\u2019s why I\u2019m confident we\u2019re going to still do well. I think the bulk of the housing market is still going to require the traditional family home, but currently, 40% of the new dwellings that are being built are apartments, and it\u2019s going to be more in the future.
\nI think that we\u2019re building the wrong sort. I think a lot of these high-rise apartment towers are not where the affluent DINKS or the empty-nesters are going to want to live, and I think they\u2019re going to be the slums of the future.
\nOn the other hand, well-located, medium- and low-density apartments and townhouses in the inner suburbs of our capital cities I think are going to remain the preferred style of accommodation for an increasing demographic of people, and Kevin, I think they\u2019re also going to make great long-term investments.
\nKevin:\u00a0<\/b> Fascinating stuff. Michael, thank you so much for your time.
\nMichael:\u00a0<\/b> My pleasure, Kevin.
\nKevin:\u00a0<\/b> Michael Yardney there from Metropole Property Strategists. You can catch up with Michael, too, of course, on his very popular blog site, PropertyUpdate.com.au.
\nMichael, talk to you again soon.
\nMichael:\u00a0<\/b> Thanks, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

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