Nice summary from CBA's economists:
* Australia’s population rose by 89k, or 0.41%, to 22.16 million in the December quarter (QIV) 2009.
* Annual growth was 433k or 1.99%pa in QIV, slightly lower than the 452k or 2.1%pa rate of QIII.
* Net overseas migration was 277.7k in the year to QIV, natural population growth was 154.9k.
* Across the States, Western Australia had the fastest growth rate of 2.65% over the past year.
* Australia’s strong population growth will continue to place upward pressure on housing prices and rents.
* Today’s ABS population clock is at 22,362,543, already 200k higher than the QIV reading.
Summary
Today’s strong population growth figures demonstrate one of the reasons why Australia avoided some of the nasty problems that still plague the housing sectors in the advanced economies.
Australia’s strong population growth and weak new residential construction over 2002 to 2008 has resulted in a significant undersupply of dwellings. The undersupply created pent-up demand pressures that were released as the RBA cut interest rates through 2008 and 2009.
So, while the US and UK witnessed 30% falls in house prices from 2007 to 2009 as their unemployment rates rose and the housing markets went into oversupply, Australia recorded 20% rises. Much of the commentary from offshore about Asutralian house prices appears to be based on the (incorrect) view that there is an oversupply of dwellings in the major Australian cities. On our estimates, underlying annual housing demand is around 190k, while new construction, now 150k, is expected to reach 184k in mid 2011.
Net overseas migration has been ramped-up by the Federal Government from 2002 because of fears of widespread labour shortages which would lead to inflationary wages growth. The Global Financial Crisis (GFC) calmed these fears for a while. But the re-emergence of the mining boom via higher commodity prices will most probably see net overseas migration maintained around the 250k level in coming years. The major implications from Australia’s strong population growth are continuing upward pressures on housing costs through higher dwelling prices and rents. Higher mortgage rates over the coming year will tend to subdue house sales and increase pent-up demand for house purchases, which then increases the number of renters.
