How do population increases affect the housing market?
Numbers from the Australian Bureau of Statistics (ABS) can sometimes be slow to emerge but are always of some interest when we try to understand, with a little hindsight, what drove changes in property prices.
The recently-released full-year population change statistics cover the financial year ended 30 June 2017. They estimate that the Victorian population grew by over 144,000 to over 6.3 million over that 12 months, with Greater Melbourne accounting for nearly 87 per cent of the growth.
Regional Victoria’s population also increased, by nearly 19,000 or 1.3 per cent. This percentage increase outstripped regional growth in almost every other state and territory. Regional Queensland equalled Victoria’s regional percentage increase, but it must be remembered that more Sunshine Staters live outside Brisbane than in it.
In numerical terms, regional Victoria population growth was nearly double that of Adelaide’s and nearly matched that of Perth.
While we can’t be certain of the direct correlation, we do know that median house price in regional Victoria increased by 6.4 per cent over July 2016-June 2017. When we look at the annual increase in the 2017 calendar year, we see that the regional house price median rose by 10 per cent.
If one looks at those local government areas where population increases were highest, we see Greater Geelong attracted a net 6,195 more residents in 2016/17, with the median house price rising 8.7 per cent. Ballarat’s population surged by 1,921, and the house median rose 5.0 per cent. Greater Baw Baw’s population increase was 1,356, and the median was up 9.0 per cent, while in Mitchell, 1,163 new residents saw the median up by 8.6 percent.
In all these cases, the annual median increase measured six months later rose again, as it eventually did in Greater Bendigo, despite the median price falling by 3.7 per cent during the time that 1,834 new people moved into the area.
Population shift can be a factor in changing median house prices, but it is certainly not the only determinant.
For information on your local area, see reiv.com.au/market-insights.