Newsroom
Migration boom swells Australia
Date Posted: 17/12/2007
The pattern for property market movements is (often) one of long periods of moderate price increases (5-7 years) followed by shorter periods (2-3 years) of exceptional growth. The bulk of the push towards the end of the property cycle is demand side driven as people clamor to jump on the property bandwagon, which is obvious for all to see by that time. However, the vast majority will have missed out on big proportion of the growth as property prices increased under the radar of the media.
Anyway… we haven’t quite reached that period yet but the east coast property market is rapidly creeping into gear as we speak. While the solid growth we are witnessing in many markets is still being driven by supply shortages there is a subtle shift beginning to happen in the investing landscape.
The large scale immigration intake is adding to demand side pressure as Australia rushes to fill vacant employment positions with skilled migrants. We expect this trend to continue over the short to medium term as a method to combat the inflationary pressure of continued wage price increases arising from labour shortages. The increase in migrant intake will have an immediate effect on demand for property; much of this will be in the inner city areas (an area where migrant demand largely flows to). All the ingredients for the big demand side push are being added to the mix.
Additionally, the booming economic conditions has added to the population growth figures with people beginning to be more confident about having babies. We expect the increasing fertility rate to have a delayed effect on the housing market with new parents more likely to begin upsizing to larger dwellings as their children hit their early teens.
As an aside, it’s interesting to note the link between economic conditions and the fertility rate. In developing economies there is typically a higher fertility rate than in developed economies. This is due to the fact that in developing countries children tend to become a source of welfare during retirement. In contrast, in developed countries children are costly! So confidence in developed economies starts to affect fertility rates and by default future property demand and prices.
