Property Growth - Surety for you property investment success
by Grant Warnes_Senior Property Investment Adviser
The populations of Australia’s major metropolises – Melbourne, Sydney and Brisbane, have been growing at exponential rates and it could potentially mean money for you.
In the 10 years prior to June 2007, Melbourne’s inner urban population grew by 63,000 people, Sydney’s population increased by 67,000 and inner urban Brisbane by 47,000.¹
Presently, there is the equivalent of two full 747’s landing in Melbourne every week with new permanent residents.
Over the last three decades it has been estimated that the number of persons per household in inner urban Melbourne has dropped from 5.5 persons to 1.6 persons, which creates an acute underlining demand for inner urban medium to high density accommodation.²
ABS figures from 2009 show Melbourne’s population growth increased by an annual rate of 2 per cent, that is 80,000 people, making it the fastest growing city, in relation to actual numbers, in Australia. Sydney’s population grew 1.3 per cent and Brisbane’s by 2.3 per cent. Sydney remains Australia’s biggest city with just under 4.4 million people in mid-2008, Brisbane around 1.95 million, while Melbourne hit the 4 million mark last year and is expected to out grow Sydney at some time in the future.
Supply & Demand
These population increases, in addition to the normal underlying requirement for residential accommodation, has created an unprecedented level of demand from both owners and occupiers across each of these cities which probably has never been seen before.
However, at the same time as this increased level of demand, the supply is restricted and nowhere near where it should be to meet the demand. This undersupply is a result of increased challenges for developers in obtaining funding to create property, government planning and regulatory restrictions, snail pace infrastructure support and the GFC.
This has resulted in historically low vacancy rates, and competition for the purchase of residential property by both owner occupiers and investors, resulting in increased rentals and capital values.
If we focus in particular on inner urban residential property, this supply shortage in relation to demand is acute.
What does this mean for long term property investors?
Now these population statistics may not, at first glance, mean a lot to you, however as a long term property investor, you should take note. This circumstance should go to your confidence. It will ensure future Returns, Security and Flexibility.
Particularly in the better inner urban areas of these important cities, this chronic shortage of supply and very strong underlying demand is with us for a long time.
I encourage you to make a time with your Financial Adviser to review your current circumstances and discuss your options.
¹ Australian Bureau of Statistics; KPMG
² ‘The mix that makes a city’s rental crisis,’ THE AGE, Saturday 9 May 2009
For more information, or to arrange an appointment with a John Hopkins Property Adviser, please contact our Client Liaison Officer on 1300 726 082 or click here.