Bernard Salt, Partner with KPMG writes:
Australia is growing three times faster than China. That’s good for the economy.
The Australian economy may well be suffering from cut-backs in mining and manufacturing activity but this nation has a secret weapon. Our building and construction sector is underpinned by close to record rates of growth in population. The rise in numbers is depicted in our latest demographics infographic. It shows growth of close to 390,000 people per annum, up from around 220,000 per annum about a decade earlier.
Australia’s projected population and Australia’s projected households
Based on these rates, Australia’s population is estimated to increase by 4.2 million people over the next decade. That means we are growing even faster than India and the United States, and three times faster than China.
“Australia’s elevated and internationally significant rate of population growth will drive the demand for housing.” ~ Bernard Salt Partner in Charge, Demographics
People = jobs
Australia’s elevated and internationally significant rate of population growth will drive the demand for housing, for household formation and for housing finance. That translates into more jobs.
The capital cities are particularly well placed in this regard. Melbourne, Sydney and Perth have been all experiencing rapid expansion, their growth running at close to record rates.
In the year 2012-2013, Melbourne’s population jumped up by 95,000, with Sydney close behind at 81,000. Perth also saw a dramatic increase of 67,000 – although more recent data suggests that growth rates are slowing in the West.
It is not surprising then that Sydney remains this nation’s biggest city with 4.8 million residents. It is followed closely by the faster-growing Melbourne at 4.3 million then Brisbane at 2.2 million.
Looking beyond our capitals
Yet our capital cities aren’t the whole story. In fact the biggest single market on the Australian continent is what might be termed the ‘Koala Conurbation’ with 5.5 million people connecting Sydney with Newcastle and Wollongong.
Melbourne-Geelong is also a heavy weight with 4.5 million people while South East Queensland – linking Brisbane, the Gold Coast, the Sunshine Coast and Toowoomba – packs some punch at 3.2 million. Perth tops out at barely 2 million.
The city vs suburbia
Our building and construction picture is more nuanced too. Building hotspots tell the two stories of Australia’s housing preferences: the inner city and suburbia.
Our figures show the top five spots for new residential housing unit approvals are relatively balanced between the city centres and inner city – such as the City of Melbourne and Sydney’s Mascot-Eastlakes – and the edge of suburbia in places like Perth’s Baldivis and Yanchep.
This may reflect the fact that families continue to dominate Australia’s households. While singles make up about a quarter of all households, families still lead at one in three.
Relying on our immigrants
Ultimately, Australia’s economic prospects could well depend on immigration trends however – that is, if our tremendous growth rates are indeed our secret weapon.
In 2014, the first three quarters showed almost two-thirds of the country’s population growth came from net overseas migration. This shift is particularly significant when compared to around half over the previous four decades.
As long as immigration levels remain elevated, it may be that Australia has at least one sure-fire driver of demand for jobs.