Australia’s population is exploding.
Let me refer you to this excerpt from Bulletproof Investing, which I wrote in 2021:
“As we enter the third decade of the 21st Century, the Australian population is edging towards 26 million people. As a nation, we have been growing by about 375,000 people per annum: 145,000 of those are births over deaths, a further 132,000 from overseas migrants, while the balance is largely driven by the influx of overseas students. To help keep housing affordable, we are moving to more dense accommodation (medium to high rise) or building on smaller blocks, further away from central business districts.”
My thesis at the time was, that to keep housing affordable, we would need to come to terms with living in smaller spaces to keep housing affordable.
Just last week, the Australian Bureau of Statistics (ABS) provided their quarterly update on population growth as of September 2023.
The key findings were:
- Australia’s population was 26.8 million people.
- In the last 12 months, the population grew by 659,800 people (2.5%); and
- Annual natural increase was 111,000 while net overseas migration was 548,800.
There is a bit to unpack in those numbers.
The Australian population is growing at nearly double the rate it was when I penned the book.
Australia’s rate of natural increase is down, owing to a decrease in births, and an increase in deaths (not surprising, given our ageing population) compared with historical averages.
Most of that growth came from overseas migration. Population growth from overseas migration is more than double what it was when I wrote my book.
Population growth is a polarising subject. Whether you are for or against growing our population, at the end of the day, the choice is out of our hands. The Australian Government (no matter which party you vote for) is committed to growing the population to combat our ageing population.
For what it’s worth, I’m for multiculturalism but against high rates of population growth. We should grow our population in line with the rate we are able to build infrastructure and housing.
The issue is we’ve gone from having 7 taxpayers for every retiree, to having 3.5 taxpayers for every retiree. The alternative to growing the population would be to cut back on expenses, which isn’t going to get anyone elected.
You can get your knickers in a knot and complain until you’re blue in the face, or you can play to the rules.
For the last 50 years, land has been the single best asset you could invest in. The same will be true for the next 50 years if you take into account what I’ve written above.
To build the required housing and help keep housing affordable, we are moving to more dense accommodation (medium to high rise) and building on smaller blocks, further away from central business districts.
It’s the only possible way to keep up with population growth.
Sydney, Australia’s biggest and most densely populated city, contains 429 people per square kilometre. Compare that with Greater London which houses 1,500 people per square kilometre, and, at the extreme, New York City which houses 27,000 people per square kilometre. Even Copenhagen, regarded as the poster child for urban city design, houses 1,200 people per square kilometre.
At this rate, we will need to build more houses on our land, and that is going to mean our land prices will increase. It may well be that we get our governments to get their act together at some point and make it easier to build density into our cities. That will help keep house prices stable.
But that doesn’t mean land values won’t keep growing like they have for the past 50 years. Just 28 per cent of Aussies live in an apartment or townhouse. This is up from 25 per cent in 2001. Expect that number to move closer to 50 per cent in time.
Same goes for the size of our blocks of land; they will need to reduce. Just as they started out when the early settlers built their houses in places like Sydney’s Paddington and the Melbourne suburb of Richmond.
Ask yourself this … are you doing enough to maximise your position within the rules of the game?
