Is increased immigration boosting property prices?

Is increased immigration boosting property prices?

Net overseas immigration last financial year saw 400,000 more people come to Australia, and this financial year, it looks like we will add another 300,000 people. Promotors of Real estate are shouting this Net Immigration number is massive and will push up property prices.

It’s a neat argument, focusing on one data point (net immigration). Forget interest rates, the economy, recessions, wars, and anything else; real estate prices are all about immigration!

Population growth is really made up of 3 parts: natural population growth, net interstate migration and net overseas migration.

In NSW, we have less than 100,000 births and more than 50,000 deaths a year, so we come out positive by about 45,000 each year.

As far as net interstate migration, NSW is described as a donor state. We lose more people to the other states than we gain. Typically, we lose roughly 17,000 people a year.

Finally, there is net overseas migration, which comprises people moving to NSW from overseas, those people who move overseas.  We average about an extra 66,000 people a year and that looks like it will remain at pretty much that rate through to 2061. That all adds up to around 100,000 additional people, give or take a few thousand, living in NSW each year for the next 40 years.

The graph is for Sydney’s projected population growth published by the UN. They get their figures from the Australian Government’s Centre for Population.

The blue line is the population numbers. Where it and the red line cross is Sydney’s current population which is 5,120,000 roughly.

The green line is the growth rate. Where the red and green line cross is our current growth rate of 1.27% per annum.  As the direction of that line suggests, population growth for Sydney is slowing rather than booming.

NSW Department of Planning is projecting NSW’s population growth over the next ten years to hover around 0.8% per annum. Clearly the move from Sydney to the regions during covid has well and truly finished and the tide is coming back in.

Are we building enough property?

Most media articles tend to follow claims of population booms with warnings of housing supply shortages.

The Australian Bureau of Statistics publishes data on the volume of houses, townhouses, and units across NSW. The number of dwellings in NSW rose from 3,053,407 in June 2016 to 3,373,885 in June 2022 (this allows for properties knocked down). Those numbers might mean little to you, and that is fair enough.

Here is the number these statistics translate into 1.67%.  That is the growth rate of dwelling numbers each year for the last six years.

The population growth rate in Sydney is 1.27% per annum and falling.

Dwelling numbers have been growing in NSW by 1.67%.  We are not going to have a property boom driven by immigration.

This data isn’t mine; it’s from the Australian Bureau of Statistics, Department of Planning in NSW, Centre of Population, and the NSW Treasury.

So, when you hear people argue that real estate will boom because of massive immigration, maybe smile and say, ‘I know’.

Author: Stephen Jackson


Sign up here to get this Newsletter delivered straight to your inbox each month.

Stay informed with Jackson Rowe.