The Great Riddle Called Population Growth
Australia has added a little in deficit of 400,000 heads to its population kitty over the last year. Places like Tasmania, Canberra and South Australia have not seen any appreciable population growth, one that has been witnessed by areas like NSW, Queensland, Victoria and Western Australia. Pete Wargent for the Property Update states that Western Australia has added most to its kitty when seen in terms of percentage hike.
Wargent attributes population growth in Western Australia to the mining sector. He further feels that so many people added over the last year have helped in retaining the property momentum.
Population spike creates housing undersupply
After all, 400,000 people added to the national population are bound to create shortage of dwellings and all of us understand the connection between undersupply and high prices.
House prices have not shot in real terms
Two important points to ponder though- wages (relative purchasing power) have increased thus bringing down property prices in real terms. Second, interest rates are so low that borrowing is no more an unaffordable idea (if rates stick to their present value)
Household incomes have outperformed house prices
Household income, reports Wargent, has overperformed Sydney property prices and easily so. However, all this might change shortly as low interest rates, perennial undersupply and strong investor activity (domestic as well as overseas) will force house prices through the ceiling.
You can read the original article here.
Factors called “average home sizes” and “higher life expectancy”
We cannot arrest the rise in Sydney population because interstate migration will only increase as people get besotted by the idea of living in Sydney. Higher life expectancy will push up the gulf between birth and death rate even further. In light of these facts, I think we need to take a closer look at two factors.
- We will have to do away with our penchant towards McMansions. Sydneysiders are highly indulgent when it comes to their living spaces. Average home size in NSW is 262.9 square metres (good three times that of United Kingdom). Bigger homes will mean lesser number of them, thus forcing extreme housing pressure.
- We also need to look at the fact that higher life expectancy will mean more senior citizens. Theirs is largely a 2-people household. This presents a sure enough reason for further dwelling crisis. I think it will be a good idea to construct many more granny flats in Sydney. This move can salvage the situation to some extent.
Do you agree Sydney will need 100,000 more homes in the next 20 years (Urban Taskforce estimate)?