In today’s show Pete Wargent, from AllenWargent, wades into the debate about capital cities versus the regions and where we are seeing the best growth.
Kevin: You might recall last week I was talking to Peter Wargent – Peter, of course, is a buyer’s agent from AllenWargent – on the back of a report that Peter wrote that I read in Michael Yardney’s property update, which is where over the next 25 years, through to 2036, Australia is projected to soar in terms of its population by ten million heads up to 32.4 million.
Peter, I wanted to follow on from our discussion last week. Welcome back to the show. Thanks again for your time. I wanted to ask you about what impact this is going to have as we look at cap city markets versus the regions.
Peter: The latest ABS Family and Household Projections through to 2036 implied that we’re going to need a huge number of households, an extra 4.3 million households, over that time, which will take us to a total of 12.7 million. The projections show where those households are expected to be required. The four markets that will require the greatest number of households will be Sydney, Melbourne, Brisbane, and Perth.
The greatest number will actually be required in Melbourne – 938,000 households, which is a huge number. But the good news from Melbourne’s point of view is that at least it doesn’t have an inherent under-supply. At least it’s coming from a position of a fair number of dwellings on the market. Sydney, on the other hand, is coming from a position of under-supply, so it’s got a heck of a lot of building to do.
Kevin: What about the Brisbane market? Is that under-supplied at present?
Peter: The Brisbane market is a bit of a two-speed thing at the moment. As you know, I’m living in Brisbane these days. The unit market in particular around the inner suburbs has a huge number of approvals being pushed through.
The unit market has seen approvals over the last 12 months at record levels – more than 12,000 – so as those units start to come online, I suspect we’ll have an over-supply of particularly high-rise dwellings. There’s a new tower to go in, the Skytower on Margaret Street.
But there are also a lot of approvals for suburbs around the CBD, so I think it’s a bit of a two-speed thing in Brisbane. Particularly, high-rise units will end up in an oversupply position. Houses is a slightly different market there.
Kevin: Last week we talked also about those lone households and the fact that we’re staying in our houses much longer. But with that increase in the number of properties that are required, is that going to reflect in the properties being a little bit different? Are developers going to need to respond to this, Peter?
Peter: Yes, and I think we’re already seeing that to some extent. The increase in the number of childless couples projected and the increase in the number of lone households projected is going to see a huge increase from medium-density type property demand. That average household size is projected to fall to 2.5 over the next 25 years.
We’re starting to see that already in the latest building approvals numbers. Units and apartment approvals are actually at the highest level they’ve ever been now in Australia, and we’ve approved more than 205,000 dwellings for construction in the last year. That’s a record high.
Kevin: Who will be the winners and losers if we look around Australia at the impact of this over the next 20-25 years?
Peter: The latest population growth figures suggest that interstate migration is actually falling as the mining boom passes its peak or has passed its peak, so therefore we’re seeing a lot more people in Sydney and Melbourne stay put rather than migrate to the mining states. In short, it’s putting a huge amount of pressure on Sydney’s and Melbourne’s property markets and infrastructure.
In terms of some of the other areas that’ll be winners, we talked last week about some of those Queensland regional markets expected to grow – Gold Coast and Sunshine Coast – but also Mackay, Townsville, and Rockhampton are several of the Queensland markets that are expected to see a big rise in demand for property.
Kevin: Pete, always good talking to you. Thank you very much. Pete Wargent, of course, is a buyer’s agent from AllenWargent. Pete, thanks again for your time.
Peter: My pleasure, Kevin.