The accelerating Australian population boom

It's a bit of a mystery to me why people are so keen to try to dismiss population growth as a key factor which underpins our major capital city property markets.

I mean, just take a look at today's numbers from the ABS:

Source: ABS

In the year to December 2012, the population of Australia increased by 394,200 people or 1.8%, which is way ahead of the long-term average of 1.4%.

Of course, population growth does not occur smoothly across the states. 

In some states such as South Australia (+15,600), ACT (+8,600), Northern Territory (+4,200) and Tasmania (+400), the absolute growth numbers continue to be quite small. I don't expect that to change too much.

On the other hand, take a look at what is happening in the states which house the major capital cities.

The population of WA is absolutely booming by 3.5% in the year to December 2012 or 83,000 people, so it's little wonder that the Perth property market is flying.

And in Queensland (+92,500), Victoria (+99,500) and New South Wales (+90,400) the population growth continues apace.

People continue to head largely to the capital cities, and so it's little coincidence that over the past 12 months prices in Sydney (+4.61%) and Perth are smoking along (+7.8%). Growth in Melbourne has been a little more subdued (+2.12%) but then, why wouldn't it be? Melbourne has, after all, experienced a quite phenomenal boom in prices since 2007.

It's small wonder that we struggle to keep up with accommodation and infrastructure needs with population growth figures such as these reported today.

Owner occupied housing finance +1.8% in May

The value of owner occupied dwelling commitments increased for the 4th consecutive month in May (+1.8% seasonally adjusted).

The number of owner occupied commitments also continues to surge upwards (+2.6%) in May to 49,636, and is up for the 7th month in a row. The trend is up very strongly over the last couple of years.



Source: ABS

And the value of total dwelling commitments continues to surge (+2.0%) as it has been doing over the past year:

Source: ABS

Investor commitments are up a massive 24% over the year to date and are rapidly approaching all-time highs. 

This global trend towards real estate as an investment asset class is one I have discussed plenty and in part explains why I believe that inner and middle ring suburbs of the four major capital cities are likely to fare significantly better than other areas.

I've also been suggesting for months that first homebuyer commitments will gradually recover as those on the sidelines increasingly do not expect prices to fall, and they were up for the 5th month in a row, recording a 17% jump in the month of May. 

However, some caution should be exercised on this figure, as the 17% increase is still on a fairly low base and the result is likely distorted by grants and may soften in July once the grant rules are shifted in Victoria, Tassie and the ACT.

There are a lot of theories as to whether these strong figures across the board will or will not continue to move up at such a strong pace.

I'll analyse this in more detail tomorrow, but for now it's fair to say that yet another strong result means that those forecasting a housing bust will have to put the champagne on ice for a long while yet.