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Australia’s Strongest Property Markets Defy Population Growth

Australia’s Strongest Property Markets Defy Population Growth
April 20, 2020 Simon Pressley

The results of Australia’s best-performed property markets of the last 5-years are yet another piece of compelling evidence that confirms population growth is far from the biggest influence on property market performance.

Analysis conducted by Australia’s premier property market analyst and national award-winning buyer’s agency, Propertyology, confirmed that, of the more than 500 municipalities across Australia’s eight states and territories, the 75 percent increase in median house price in the Hobart municipality of Brighton was the best in the country over the last 5-years.

Interestingly, its Brighton’s 9.2 percent population growth over the last 5-years was far from a record-breaker.

With 47 percent population growth, Camden in Sydney’s outer south-west takes the national population growth title for the last 5-years. Conversely, Camden’s 27 percent increase in median house price was middle of the road.

In a broad national sense, the municipalities which were the better performed property markets over the 5-years ending December 2019 include Hobart City (62 percent) and Glenorchy (58 percent) in Tasmania, Hepburn and Alpine in regional Victoria (both 60 percent), while Brimbank in Melbourne and Mosman in Sydney both produced a 57 percent increase in median house price.

Between 45 percent and 51 percent median house price growth occurred in regional municipalities such as Mitchell VIC, Snowy Monaro NSW, Wingecarribee NSW, Lithgow NSW, Noosa QLD, Kempsey NSW, Byron NSW, George Town TAS and Shoalhaven NSW. In most cases, their respective population growth rates were below the 7.9 percent 5-year national average.

Out of more than 500 city councils all over Australia, the Western Australian municipality of Serpentine-Jarrahdale had the third highest population growth rate (37.5 percent) over the last 5-years – that’s more than quadrupled the national average. But the median house price declined by 21 percent over the last 5-years.

I hope this is sinking in!

Victoria

Greater-Melbourne’s 13.2 percent population growth was Australia’s highest capital city over the last 5-years. The 5-year increase in Greater-Melbourne’s median house price of 37 percent was also the second-best capital city. But that’s where the coincidences stop!

At an individual Victorian municipality level, Melbourne City Council had a whopping 37.5 percent increase in population. All of this population took up residency in one of the many inner-city apartments where the median apartment value only increased by 9.9 percent over 5-years.

Wyndham (33 percent), Melton and Cardinia (both 27 percent), Casey and Whittlesea (both 22 percent), and Hume (21 percent) were other Victorian big population beneficiaries.

The affluent Melbourne municipality of Yarra had a 16 percent increase in population and a 42 percent increase in median house price while Yarra’s median apartment value only increased by 11 percent over the last 5-years.

 

Related article: How well has your apartment performed?

 

Several regional Victorian locations were among Australia’s best-performed property markets over the last 5-years. The population growth to median house price growth relationship was 9.6 percent / 41 percent in Ballarat, 9.6 / 21 in Bendigo, 13.9 / 44 in Geelong, 4 / 25 in Shepparton, 4.2 / 22.8 in Warrnambool, 3.8 / 24.3 in Mildura, and 7 / 27.9 in East Gippsland.

Perhaps the statistic that people will find the most mind-blowing relates to Ararat. Over the last decade, Ararat’s population increased by just 463 people, its median house price increased by an average of 3.5 percent per annum, whereas Australia’s largest municipality (Brisbane City Council) produced population growth of 173,913 and its median house price increased by an inferior 3.3 per annum.

 

New South Wales

Greater-Sydney’s 9.6 percent population growth was Australia’s equal third highest capital city (with Canberra) over the last 5-years.

The 5-year increase in Greater-Sydney’s median house price of 26 percent was a middle-of-the-road fourth-best capital city.

At an individual NSW municipality level, Sydney City Council had a significant 20 percent increase in population over the last 5-years. Most of this population took up residence in a high-rise apartment where the median value increased 37 percent.

Strathfield and Parramatta (both 16 percent), Bega Valley and The Hills (both 15 percent), Lane Cove and Liverpool (both 13 percent) were other big NSW population beneficiaries.

The affluent municipality of Mosman produced NSW’s highest median house price growth (56 percent) over the last 5-years while Mosman apartments increased by 37 percent. But Mosman’s population only increased by a miserly 3.8 percent over the last 5-years.

It’s a similar story in North Sydney where the population growth of 7.3 percent was below the national average (7.9 percent), but the median house price increased by 50 percent over the last 5-years.

 

Related article: What are Australia’s 40 most expensive cities?

 

Many of NSW’s strongest property markets over the last 5-years were regional locations. The population growth rate to median house price growth relationship was 6.5 percent – 25 percent in Albury, 10 – 47 in Byron, 5.8 – 43 in Coffs Harbour, 12.2 – 40 in Maitland, 4.2 – 33 in Newcastle, 4.2 – 37 in Orange, Port Macquarie 8.4 – 35, Shellharbour 6.5 – 43 and Wollongong 3.1 median house price growth with 34 percent population growth.

 

Video here: Here’s why a crisis creates property price growth

 

To highlight that people’s mesmerisation with population growth is so misguided, Parramatta – one of Australia’s most densely populated municipalities – is a good case study. While it’s population growth of 16.1 percent was more than double the 5-year national average, its 5-year median house price growth of 34.5 percent was inferior to many smaller NSW populations. For example, Lismore’s population actually declined by 1.4 percent, yet its median house price increased by 38.8 percent. Griffith (4.3 percent) and Kempsey (1.2 percent) had very mild population growth while their median house price growth surpassed Parramatta, 41.5 percent 38.8 percent respectively.

 

Queensland

Greater-Brisbane’s 10.3 percent population growth was Australia’s second highest capital city over the last 5-years.

The 5-year increase in Greater-Brisbane’s median house price of 15 percent was the fifth-best capital city.

At an individual Queensland municipality level, the biggest population growth rates over the last 5-years were in Ipswich (17 percent), Sunshine Coast (13), Gold Coast and Moreton Bay (12), Logan (10), and Brisbane City Council (9 percent).

Highlighting that population growth is far from the biggest influence on property prices, the Queensland municipality with the biggest increase in median house price over the last 5-years was Noosa (48.8 percent) where population only increased by 5.3 percent, well below the 7.9 percent national average.

 

Related article: Queensland’s double-digit real estate growth potential

 

Population in the SEQ city council of Southern Downs (home of Warwick and Stanthorpe) actually declined by 0.4 percent over the last 5-years, yet the median house price (13.5 percent increase) outperformed Perth, where population increased by 100,477 over the last 5-years.

Ipswich is a classic example of a location where people’s misguided mesmerisation with population growth comes unstuck. 5-year population growth of 17 percent is more than double Scenic Rim’s (Beaudesert and Boonah), yet Ipswich’s 15 percent increase in median house prices over those 5-years is inferior to Scenic Rim’s 17 percent.

 

Tasmania

The last 5-years has been a golden era for the broader Tasmanian economy, rebounding out of a state recession to a national leader. The state should be incredibly proud of their achievements. It’s also reflected in the value of people’s homes.

Economic growth and the subsequent boost to consumer and business confidence that followed, more so than population growth, has been the primary driver of Tasmanian real estate.

Even though Hobart’s 5-year population growth rate was a modest 7 percent, its 55 percent price growth was more than double all other capital cities except Melbourne (37 percent).

 

Related article: 2020 property market fundamentals

 

At an individual Tasmanian municipality level, Brighton produced the state’s highest increase in median house prices over the last 5-years. Indeed, 75 percent price growth was the very best out of all of Australia’s more than 500 city councils.

Other Tasmanian property markets that were among the best in the entire country over the last 5-years include Hobart city council (62 percent), Clarence (60), Huon Valley (58), Glenorchy (56), Kingborough (51 percent).

In comparison, population growth rates over the last 5-years are mostly below the 7.9 percent national average. Hobart city council’s population increased by 7 percent, while Clarence (7), Huon Valley (7.6), Glenorchy (4.6) and Kingborough (7.7) were also thereabouts.

We walk-the-walk. Here’s a recent example of our work for a client:

Regional Tasmanian property markets commenced their run a couple of years after Hobart. Over the 3-years ending December 2019, George Town (51 percent), Burnie (25 percent), Launceston (24 percent), and Devonport (21 percent) were all superior to every single Australian capital city with the exception of Hobart (30 percent),” said Propertyology Head of Research, Simon Pressley.

 

Related article: Australia’s oldest regional city outperforms oldest capital city

 

The median house price over the last 5-years increased by 26.5 percent in Burnie and 32.2 per cent in Launceston, both are streets ahead of Brisbane (15 percent) and Adelaide (14.6 percent). But whereas Brisbane’s population growth over the last 5-years was 10.3 percent (227,000 people) and Adelaide’s (52,000 people), Burnie’s population actually declined by 0.3 percent and Launceston’s had a very modest 1.8 percent increase.

 

Far from simples!

The regular rhetoric reported by many property experts and economists implies that supply-and-demand is a simple equation:

 

just subtract ‘x’ (supply) from ‘y’ (population growth)

 

To the contrary, property markets do not follow the meerkats theme – simples! In fact, there are few things on the planet that are more complicated than property markets.

The supply and demand equation of a property market is nothing like a barrel of oil, a wagon of coal, or a crate of bananas.

People aren’t homogeneous. Properties aren’t homogeneous either. In the grand scheme of things, year-to-year population growth plays only a small role in real estate price fluctuations.

Instead of the population growth that everyone believes to be the driving force, housing demand is aa measurement of population behaviour.

The fact that human behaviour is so unpredictable is the reason that the task of forecasting property markets is so damn difficult. It’s not a mathematical formulae or exact science!

Propertyology is Australia’s premier property market analyst and award-winning buyer’s agency. Every capital city, every non-capital city, we analyse fundamentals in every market, every day. We use this valuable research to help everyday Aussies to invest in strategically-chosen locations (literally) all over Australia. Like to know more? Contact us here.

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