Will population growth always spell price growth?

03th September 2007

Queensland has topped the population growth rate over the past five years but local areas of Western Australia and Victoria have grown the fastest, according to Australian Bureau of Statistics data.

Queensland’s population grew 2.2 per cent between 2001 and 2006, while Western Australia recorded growth of 1.5 per cent and Victoria 1.2 per cent.

However, Perth was the fastest-growing local government area at 11.5 per cent, followed by Melton in Victoria at 9.5 per cent.

Capel, Wanneroo and Mandurah in Western Australia and Wyndham and Melbourne in Victoria were also ahead of the fastest-growing Queensland locality of Miriam Vale.?? However, Michael Carman of Wealth Enhance notes that a high population growth rate for a given local government area doesn’t necessarily equal greater pressure on housing prices in the short term.

In some areas, an increase in population might mean there are fewer vacant houses and flats; in others, more people might simply move to an area as more new homes are built.??"In the first case, there would be upward pressure on housing prices," Carman writes in his July 2007 Wealth Enhancement Bulletin.

"In the second case, there wouldn't necessarily be that upward pressure if new housing is filled at the same rate as the already existing housing.

"So population growth doesn’t equate one-for-one with house price growth.?? "Nonetheless, population movements are useful indicators of long-term trends, since where the people go the housing must go too, with prices eventually following suit."

The population in all the other states and the Northern Territory grew by less than 1 per cent between 2001 and 2006.

 

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