Our population is booming!
We welcomed 496,750 new people to the country in 2022, around 110,000 new babies and 387,000 international immigrants.
Based on the 2023 Federal Budget, the country is anticipating population growth of 525,000 in 2023, 454,000 in 2024 and circa 400,000 each year through to 2027 (financial years - FY).
We're expected to grow by 2.176 million people this FY through to the end FY'27.
The greatest single year of population growth in our nations history was in 1971 when we welcomed 535,000 new people. This coincided with the 1972-1973 property boom.
We didn't quite match 1971s growth, however with an average growth of 435,280 per year, our population is growing significantly faster that the 20 year average (2003 to 2023) of 323,000.
You can probably see where this is going.
Since 2020, dwelling approvals have crashed
This is caused by a mix of things: red tape, inflation (particularly building materials), interest rates, lack of borrowing capacity, affordability, consumer confidence is low, etc...
Ultimately, regulations around land development, building, lending and our economy have led to the private market retracting and playing it safe (which is fair enough).
Unfortunately this has coincided at a time where housing is needed more than ever in our history.
Social housing is today's hot topic!
The government has managed to lead a relatively strong economy (almost*) into recession over 3 years, while simultaneously creating a simultaneous housing bubble and housing crisis all at once (*only keeping out of recession by importing 386,000 immigrants). My question is this:
Why do we think the government responsible for causing this crisis is capable of fixing this crisis?
It took the QLD state and Federal governments around 5 years to agree on who would pay for X% of the Pacific Highway 2 to 4 lane upgrade between Robina and Reedy Creek on the Gold Coast. (Commuters today will agree that 4 lanes is now not big enough)
Even if the government finally passes the new $2Bn social housing scheme (an election promise of Labor's), when do you think the first house will finally be available for occupation - 2024, 2025?
If the stars align, who is going to win the construction contracts, and do you think they care that this is funded by your taxes?
Or will they treat it like the NDIS Providers who 'Pursued financial growth over Client Safety'. Maybe a better comparison is the Melbourne Suburban Rail Loop. Initially estimated to cost $50Bn, it has now blown out to $125bn.
Forgive me for being skeptical of government solutions.
The answer
The answer to our population growth and housing crisis is you, the private investor.
Right now there is a lot of fear driven by uncertainty, but the hard fact is that our population needs housing urgently.
There is a tremendous opportunity for the savvy investor who is financially able to grow their portfolio.
As per the population growth estimates, demand for housing is not stopping anytime soon - this has historically resulted in Capital Growth and Rental Growth (both are already underway).
