How demographics affect property investment in Australia

By Rich Harvey, CEO, propertybuyer.com.au

Smart property investment in Australia means taking into account numerous factors, from current market trends in buying and selling to how interest rates may affect demand for housing in the near future.

However, the constantly shifting demographics of the nation are often swept under the rug in favour of focusing on rental yields and the like.

Despite what some people may think, demographics can have just as much of an impact on buying investment property, if not more so.

The meeting of age, immigration and population

Generally speaking, areas with higher populations are good spots for buying investment property. More people means a greater need for housing, and therefore higher demand from a larger pool of potential buyers and renters.

This is why keeping an eye on the factors that drive population growth can be so advantageous. High population growth in areas where there is limited housing supply is ideal for investors - this means upward pressure on prices and rents.

For instance, the Australian Bureau of Statistics (ABS) reported in 2011 that longer life expectancy would lead to higher median ages throughout the country.

"At 30 June 2011, Tasmania had the oldest median age of all the states and territories at 40.2 years," the organisation reported.

"The second oldest median age was South Australia with a median age of 39.4 years, followed by New South Wales (37.4 years), Victoria (37.1 years), Queensland (36.4 years), Western Australia (36.2 years), the Australian Capital Territory (34.7 years) and the Northern Territory (31.5 years)."

A larger median age indicates people are living longer in the state. This, in addition with steady fertility rates, means greater population growth as existing Australians stick around longer and newly born Australians add to the population.

Meanwhile, the Department of Immigration and Border Protection reported on June 30, 2013 that New South Wales was the leader in attracting both temporary and permanent migrants, followed by Victoria. From 2012 - 2013, 13, 903 permanent visas were granted in NSW. Meanwhile, in Victoria, 10, 942 were granted.

More migrants means a larger population and a greater need for housing. In fact, the total number of net migrants into Australia from 2012 - 2013 was 60, 653 people. Coupled with a rising natural population growth, Australia is in constant need of more properties to house the growing population.

Each major capital city grew substantially last year according to ABS statistics to June 2013: Sydney 63,700, Melbourne 79,000, Perth 66,400, Brisbane 44,600, Darwin 2,850, Canberra 7,000, Adelaide 13,300, Gold Coast 11,400 and Newcastle 5,200.

Tracking demographic changes and trends can help property investors make better choices.