During the time it will take me to write this blog, Australia’s population would have grown by about 100 people.
Australia’s net population grows by one person every one minute and 13 seconds.
Today, according to the Australian Bureau of Statistics, our population is 25,432,000 people.
While the figures might seem staggering, they are not new. In fact, our population has been skyrocketing for decades, especially the past 25 years.
Back in 1984, Australia’s population was about 15.5 million. That’s right, about 10 million fewer people than we have living here today.
From that moment on, we have had continuously strong population growth – courtesy of robust overseas migration mainly – with about 30 per cent of our residents now being born overseas.
That said, our booming population is correspondingly producing more children, plus everyone is living longer, too, which is why Australia is growing so rapidly.
Let’s be honest, a country the size of Australia certainly is big enough to support a significantly bigger population.
Since 1984, our population has, on average, grown by an astonishing 300,000 annually!
To put this into perspective, this big country effectively ‘gives birth’ to the equivalent of a new Sunshine Coast, Geelong or Wollongong every single year.
Ditto, if we consider that our population has grown by 10 million people in 25 years, that is the equivalent of nearly two New Zealand’s!
Now that I have mesmerised you with all of these numbers, the question, naturally, is what does it mean for Australian real estate?
Well, it’s all to do with the fact that humans need shelter and, over that same period of time, it has fallen to private investors – the everyday Aussie mum and dad – to provide roofs over the heads of our growing population.
As the graph above shows, our population has been booming for decades.
Opening the front door to more immigrants has been important for skilled labour shortages across various parts of Australia, recruiting new ideas, cultural diversity, and increased taxation revenue.
But, whilst both federal Labor and Liberal have supported increased immigration, government funding for new housing supply has continually reduced.
Construction of new publicly-funded dwellings has consistently fallen for 40 years. Our three levels of government collectively now only fund 1.2 per cent of new housing stock.
Over the last 30 years, there’s been a series of major events which have had a significant influence on housing supply in Australia:
- 1987: Negative gearing was temporarily scrapped but reinstated when rents started to soar, and supply fell off a cliff.
- 1991: The Australian recession saw the government fund more housing to stimulate the economy.
- 2000: The introduction of the GST resulted in the establishment of a super-sized First Home Owner’s Grant. The scheme did more than smooth out the transition of major tax reform, it played a role in driving the biggest property boom in Australian history.
- 2008: The GFC. Australia responded by slashing interest rates and a $42 billion stimulus package which included a one-off increase in government-funded housing supply.
- 2013: The winding back of the mining construction boom was followed the commencement of a five-year apartment boom, primarily in Australia’s biggest cities.
So, while there’s been a variety of stimulatory housing supply programs, this country’s ability to fund the construction of sufficient new housing for our growing population would be totally screwed without mum-and-dad property investors.
As shown in this chart, the proportion of housing supply funded by governments is the tiniest freckle. The private sector now is responsible for 98.8 per cent of Australia’s housing supply!
Frankly, aside from shelter for the homeless and others in genuine need, I don’t believe it’s the role of governments to fund Australia’s housing needs.
Taxation revenue can only spread so far. It’s already abundantly clear that such revenue is well short of what’s required to fund essential infrastructure like hospitals, schools and transport projects for our growing population.
What this means for property investors is that Australia’s future growth and success as a nation will forever be reliant on everyday Aussie’s who want to invest in real estate.
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