Who we are and how we are changing
DEMOGRAPHICS – The socioeconomic characteristics of a population expressed statistically, such as age groups, gender, ethnicity, geographic regions, income brackets, average household size, unemployment, occupations, birth rates, net migration etc. etc
A National Census of the population is conducted every five years and collects information about a wide range of topics.
“The Census of Population and Housing (Census) is Australia’s most extensive statistical collection undertaken by the Australian Bureau of Statistics (ABS). For more than 100 years, the Census has provided a snapshot of Australia, showing how our nation has changed over time, allowing us to plan for the future.
The Census aims to accurately collect data on the key characteristics of people in Australia on Census night and the dwellings in which they live. In 2016, the Census will count close to 10 million homes and approximately 24 million people, and the most significant number counted to date.
The information you provide in the Census helps estimate Australia’s population, to distribute government funds and plan services for your community – housing, transport, education, industry, hospitals and the environment. Census data is also used by individuals and organisations in both the public and private sectors to make informed decisions on policy and planning issues that impact the lives of all Australians.”
The demographic factors to consider when making a property investment decision include:
1.Population growth – both national and local. Shelter is a basic need, and so as the population grows, does the demand for housing. With increases in population, the demand curve for housing shifts out to the right and ‘ceterus paribus’ (all other things being equal such as supply remaining constant), prices will rise to ration the available options. Australia’s population is increasing rapidly, hitting forecast milestones ahead of time – a result of both natural increases (births – deaths) and net migration. (new arrivals – people leaving)
RMIT ABC Fact Check
We have seen that the property market is a misnomer. Demand and supply vary from state to state and town to town and between varying types of properties.
We have all viewed the stories about towns ‘dying’ due to the construction of a new freeway bypassing the local area or a change in export demand for raw materials or even government policies that condemn inefficient manufacturing to become a ‘sunset industry’. Car production in Australia and more recently, the cessation of the manufacturing of the iconic Australian car, Holden, is a classic example.
Allocative efficiency assumes that resources (including labour) will be redeployed to new ‘sunrise industries’. Labour is not however perfectly mobile nor is resources, and so if the jobs ebb away, people do too.
The population existing and projected for Local Government Areas is an influential demographic that needs investigation.
Buying in an area that has a population of at least 100,000 within a 10 km radius is an important benchmark. These people constitute the tenant pool now and the market on resale.
2. Household composition – there are approximately 10 million households in Australia and their makeup varies – couples, couples with children, singles,empty-nesters, extended families, and many other variations. The average number of people per household and the relationships of those cohabiting will influence the demand for housing and the type of accommodation. For example, the increasing divorce rate means that in most cases, two houses are required in place of the marital home. Changing family composition may lead to an increased demand for smaller, higher-density living to accommodate more modest budgets. A rising number of households with ‘grey hairs’ may mean an increasing demand for low maintenance apartments and townhouses and dual living arrangements.
A family-oriented demographic tends to supply stable tenants. Once children are established in schools and sporting activities and neighbourhood friendships, the desire for permanence increases, reducing tenant turnover and the costs associated with vacancy periods and lease renewals.These factors are all taken into consideration by a qualified advisor, knowing the type of tenant that is in their client’s best interest and is their preference and satisfies their strategic approach.
3. Average age- the dominant age group in an area is a significant factor. If an area is dominated by millennials (those born in the ’80s and ’90s), we are told they are unlikely to move to outer metro areas on large lots of land with grass to mow! Their preference is for more urban, medium-density locales. The other side of the coin is that in an area with a significant young family presence, it wouldn’t make a lot of sense necessarily to invest in an apartment. Though, there are always exceptions to the rule. Many families are sacrificing space to be within preferred school catchment areas, and so demographics need to be co-examined along with the other ‘things that count’.
4. Incomes – As incomes rise, people are prepared to pay more for housing both as tenants and as owner-occupiers. Above average and rising incomes is what allows prices to rise. However, it’s important to remember the key appeal factor of affordability. Many lower socioeconomic demographics make stable, reliable tenants and the lower price bracket maximises the market on exit.
5. Unemployment – to be able to pay rent consistently, most people need to be employed. Higher average unemployment rates are to be avoided, but once again, a proper analysis will consider the employment hubs in the area and the property’s proximity to those. It may be a matter of being more selective when it comes to tenant income and employment checks – and industry concentration. Some professions are recession and unemployment proof, such as those in health and education. Proximity to a new or newly expanded hospital in a suburb with a large and growing (even ageing) population may make an excellent choice.
6. Tenure – there are two ways of looking at this metric. A high proportion of renters may indicate that an investment property is appropriate because it seems to be in demand. It may be because the population is somewhat transitory as in the case of students (but there is an endless supply of them) or because it is a boutique area that has a very high ownership entry point. Alternatively, a much higher owner-occupier rate may present an opportunity to provide a solution that is lacking in the area and be in demand also, in other words, fill a gap in the market.
7. Occupations – Being aware of the predominant occupational categories in an area will also be a guide as to the type of property that will have market appeal. For example, if predominately ‘Trades & Technicians’, then garaging and storage is probably going to be necessary. This data also is an indication of the preference for and ability to afford higher quality housing and therefore the need to meet higher expectations in terms of amenities, design and inclusions.