How The 2016 Census Tells A Story About The Property Market
One of the key factors in determining trends in house prices is to look at population growth and distribution. With the 2016 Australian census data now published, it helps buyers, sellers and investors to get a clear picture of what population statistics are actually saying.
To help you figure out what the census data means, we have put together this guide. You will find out exactly what aspects of the census are relevant to the real estate market. The good thing about using census data is that is now very recent and very accurate.
In addition to that it helps to confirm certain assumptions and predictions that have been made over the past several years. In the absence of actually counting the population every year, statistics offices use models and sample data to create predications. When census data then becomes available it is like the fog clears and you can confirm which data is correct.
So, now that all this data has been published, what does it actually mean for property prices? And how have the dynamics of home ownership and investment changed?
Overall Population Growth
In just 5 years since the last census the population of Australia has grown by almost 8.8%. That is a growth rate that is unmatched anywhere else in Western countries. Growth rates in the large urban cities has exceeded the national average where rates are over 10%.
That would be consistent with a global trend of people moving to cities rather than away. For most people this is due to the opportunities and facilities available to them. And Sydney provides some of the best opportunities in the world for young and old all types of families.
This drastic population growth is a significant factor in the increased demand for housing. What that means is that there is a fundamental economic reason for the very strong increase in real estate prices.
Supply of Housing In Sydney
The census has also revealed that the number of people per household has increased to 2.7 people in the two largest cities Sydney and Melbourne. This is above average and what is also striking is the number of households with six or more residents has increased by 20 percent.
What this says is that there is significant lack of housing supply in major urban areas like Sydney. Many people, especially younger generations, are either staying with their parents for longer, or they are choosing to share houses and apartments with large groups of people.
The fear of drastically rising house prices is that they will take a sudden downturn. This would happen if demand decreases and supply increases. But the census statistics show that there is a significant number of young people who are sharing housing. And they will likely jump on the opportunity for a place of their own.
Number Of Mortgages Still On The Rise
The number of properties bought and owned with a mortgage has increased in the past 25 years quite a lot. The reason for this is twofold. Firstly, the above-mentioned population growth has shown that a lot more young people have moved to cities. Young people generally do not have the savings to buy a house outright.
Secondly, rising house prices in general have made it more difficult for people to trade up or move without at least part financing their purchase. These are very normal occurrences in an economy that is growing as strongly as Australia’s.
Rental Is On The Rise
Renting of homes has also seen a steady rise. If you have been following our blog then you will have read that this is not a surprising trend. If you are just starting out in your career or you have a young family then you will be fully aware of how difficult it is to get on the property ladder.
For a lot of people that means they have to spend a longer time in rented accommodation before they can afford to buy their own. This provides significant opportunities for investors. With growing demand for rental houses and apartments there will be no shortage of tenants to ensure a constant occupancy rate.
More People Are Living In Apartments
The only way that such significant population growth can be supported in the long run is by building large amounts of multi-story apartment buildings. Not all of these have to be high rises in the inner suburbs of Sydney.
Even in areas a little further out, there has been a steady increase in the supply of apartments instead of houses. One of the main issues is space. There is a limited amount of space available, and single family homes are a very inefficient way to provide for a rapidly growing city.
But many people living in apartments will likely take advantage of any opportunities to rent or buy a single-family home. These are pretty natural patterns in society. Young people start out sharing apartments. Then they move into their own place with a partner. And once children come along they will aim to move into a house suitable for a family.
Household Structures Are Changing
The structure of households has also seen some changes in the last decade. There has been a big increase in both no child families and single parent families. This trend has certainly added to the demand pressures. If a couple with 2 kids has to occupy two homes rather than one because the parents have split, then demand pressures have to increase.
It is difficult to say whether such a trend will level out or not. But based on the census data available, this is not something that looks like it will end soon. With more smaller family units appearing in all of the Sydney suburbs this will likely continue to add demand for rental properties.
If you need help to understand what areas are most suitable for you, then talk to us today. We work on your behalf as buyer’s agents and will help you find and area and property that will tick all the boxes. Call Brooke on 0425 221 226