Births v deaths

This concluding post in the population missive series includes two charts and two tables.  Click on these links if you missed part 1 and part 2 of this short series.

Chart 1 tells me that Australia’s baby boom, albeit at a slowing pace, continues (see the red line and left-hand scale on chart 1) despite the removal of the baby bonus a few years back.  Deaths are also rising (grey line and right-hand scale) due mostly to our aging population.  As a result, natural increase – see chart 2 – is on the slide.  Natural increase is simply births minus deaths.

Table 1

Australia: Population growth by state/territory

State/Territory Total population Annual population growth
Total population growth Natural

increase

New South Wales 8,089,817 109,649 45,557
Victoria 6,596,039 134,020 37,343
Queensland 5,094,510 85,086 29,882
South Australia 1,751,963 15,436 5,335
Western Australia 2,621,509 27,328 18,064
Tasmania 534,457 6,159 1,159
Northern Territory 245,929 -1,129 2,524
ACT 426,704 6,325 3,409
Australia 25,365,571 382,883 143,281
Matusik + ABS.  Fiscal 2019.

Table 1 tells me that natural increase is largely concentrated in our bigger urban areas – the Sydney region, Melbourne, south east Queensland and Perth.

Table 2

Top 25 Australian LGAs ranked by natural increase

Local Authority Area, State and Rank Annual population growth
Total growth Natural increase % total growth
1 Brisbane (C) Qld 23,044 8,244 36%
2 Blacktown (C) NSW 8,373 4,380 52%
3 Wyndham (C) Vic 15,120 4,039 27%
4 Casey (C) Vic 13,429 3,823 28%
5 Canterbury-Bankstown (A) NSW 4,431 3,518 79%
6 Logan (C) Qld 7,864 3,465 44%
7 Gold Coast (C) Qld 13,990 3,121 22%
8 Moreton Bay (R) Qld 10,009 2,897 29%
9 Cumberland (A) NSW 4,922 2,871 58%
10 Hume (C) Vic 9,048 2,698 30%
11 Ipswich (C) Qld 8,739 2,570 29%
12 Parramatta (C) NSW 6,132 2,483 40%
13 Liverpool (C) NSW 4,560 2,478 54%
14 Whittlesea (C) Vic 6,891 2,270 33%
15 Wanneroo (C) WA 4,628 2,212 48%
16 Penrith (C) NSW 4,030 2,187 54%
17 Melton (C) Vic 8,177 1,985 24%
18 Campbelltown (C) (NSW) NSW 3,013 1,799 60%
19 Sydney (C) NSW 6,241 1,594 26%
20 Swan (C) WA 4,020 1,557 39%
21 Camden (A) NSW 7,408 1,531 21%
22 Stirling (C) WA 905 1,501 166%
23 Brimbank (C) Vic 779 1,495 192%
24 Townsville (C) Qld 1,013 1,371 135%
25 Moreland (C) Vic 3,987 1,364 34%
Matusik + ABS.  Fiscal 2019.

Table 2 outlines the top 25 local authority areas across Australia ranked by natural increase during fiscal 2019.  Most of these areas are outer suburbs or in the outer conurbations of our four largest cities.   Townsville is a rare exception.

My comments

Australia’s fertility rate is currently 1.7, which is below 2.1.  Here 2.1 is commonly referred to as the replacement rate.  So, without overseas migration Australia’s population would, in due course, start to shrink.  Many might think that is a good thing.  Sadly, our economy – as it is currently structured – won’t like it at all.  Nor would most people’s bank balance.

Maybe part of any COVID-19 recovery package should include the reinstatement of the baby bonus?

If not, then further pressure will build to increase our overseas migrant intake.  As outlined last week we will need immigrants to help keep our economy afloat and to help cover our debt.

Whatever the outcome, most births will continue to take place in our suburbs and increasing young families will live further away from downtown.  There is nothing wrong with this.  What’s wrong is trying to change this trend.  How we plan for, and handle this growth, is what really matters.

Overseas migration

Like last week, this post features a chart and two tables too.

Chart 1 tells me that net overseas migration has lifted substantially when compared to a generation ago.  But in recent times it has slowed down.  Like interstate migration, net overseas migration is also a cyclical occurrence.

Table 1

Australia: Population growth by state/territory

State/Territory Total population Annual population growth
Total population growth Net overseas migration
New South Wales 8,089,817 109,649 86,155
Victoria 6,596,039 134,020 84,479
Queensland 5,094,510 85,086 32,373
South Australia 1,751,963 15,436 14,059
Western Australia 2,621,509 27,328 15,715
Tasmania 534,457 6,159 2,992
Northern Territory 245,929 -1,129 718
ACT 426,704 6,325 3,110
Australia 25,365,571 382,883 239,602
Matusik + ABS.  Fiscal 2019.

Table 1 tells me the New South Wales and Victoria – read Sydney and Melbourne – receive the lion’s share of net overseas migration to Australia.

Table 2

Top 25 Australian LGAs ranked by net overseas migration

Local Authority Area, State and Rank Annual population growth
Total growth Net overseas migration % total growth
1 Brisbane (C) Qld 23,044 13,446 58%
2 Melbourne (C) Vic 8,638 8,597 100%
3 Parramatta (C) NSW 6,132 6,720 110%
4 Sydney (C) NSW 6,241 6,471 104%
5 Monash (C) Vic 2,635 6,168 234%
6 Gold Coast (C) Qld 13,990 5,540 40%
7 Canterbury-Bankstown (A) NSW 4,431 5,445 123%
8 Cumberland (A) NSW 4,922 5,380 109%
9 Wyndham (C) Vic 15,120 4,689 31%
10 Bayside (A) NSW 4,178 4,543 109%
11 Blacktown (C) NSW 8,373 4,303 51%
12 Whitehorse (C) Vic 2,466 4,264 173%
13 Randwick (C) NSW 1,504 4,138 275%
14 Greater Dandenong (C) Vic 2,061 3,915 190%
15 Casey (C) Vic 13,429 3,840 29%
16 Georges River (A) NSW 1,188 3,692 311%
17 Moreland (C) Vic 3,987 3,548 89%
18 Inner West (A) NSW 2,975 3,293 111%
19 Hume (C) Vic 9,048 3,221 36%
20 Brimbank (C) Vic 779 3,168 407%
21 Darebin (C) Vic 2,531 3,118 123%
22 Whittlesea (C) Vic 6,891 3,065 44%
23 Fairfield (C) NSW 1,278 2,813 220%
24 Ryde (C) NSW 3,931 2,735 70%
25 Glen Eira (C) Vic 2,591 2,734 106%
Matusik + ABS.  Fiscal 2019.

Table 2 outlines the top 25 local authority areas across Australia ranked by total net overseas migration during fiscal 2019.  Most of these areas are in either Sydney or Melbourne and most occupy inner city or middle-ring locations.  In many instances net overseas migration is the only reason these areas are experiencing an increasing headcount.

My comments

There has been considerable debate in recent weeks if overseas migration will fall as a result of the coronavirus.

I think that in the short term – over the next 12 to 24 months – that is very likely, if for no other reasons than limitations on international travel and overseas student intakes.

But once these things become unrestrained – and they will – it is reasonable to accept that the recent high levels of overseas migration will resume.

In fact, I will go further and say that the net levels of overseas migration to Australia are very likely to rise, and maybe substantially, over the decades to come.

Why?  Some statistics first.

The median age of a recent overseas migrant to Australia is 26 years old, whilst that number for an Australian citizen is just under 40.  More telling is that 61% of overseas arrivals to Australia are currently aged between 18 and 34 years, whilst this segment holds just 27% of the overall Australian population.

In short, Australia will need their tax dollars – and most likely lower wage costs too – in order to pay for, and recover from, our current largesse.

Interstate movements

One chart and two tables this post.

Chart 1 tells me that population movements between states and territories was on a rapid ascent before COVID-19.  The chart also shows that interstate population movements are cyclical.  Moves are influenced by the economy, demographics and also perception.

Also, the chart shows that when things get hard, economically, interstate movements slow down as we assumingly bunker down until things monetary wise improve.  Chart 1 also shows that the bounce back is often as steep the previous decline.

Table 1

Australia: Population growth by state/territory

State/Territory Total population Annual population growth
Total population growth Net interstate migration
New South Wales 8,089,817 109,649 -22,063
Victoria 6,596,039 134,020 12,198
Queensland 5,094,510 85,086 22,831
South Australia 1,751,963 15,436 -3,958
Western Australia 2,621,509 27,328 -6,451
Tasmania 534,457 6,159 2,008
Northern Territory 245,929 -1,129 -4,371
ACT 426,704 6,325 -194
Australia 25,365,571 382,883 0
Matusik + ABS.  Fiscal 2019.

Table 1 tells me that Queensland, Victoria and Tasmania currently attract more interstate arrivals than departures, whilst in the other states and territories more people leave than arrive.

Table 2

Top 25 Australian LGAs ranked by total internal population growth

Local Authority Area, State and Rank Annual population growth
Total growth Internal migration % total growth
1 Wyndham (C) Vic 15,120 6,392 42%
2 Sunshine Coast (R) Qld 8,591 6,047 70%
3 Casey (C) Vic 13,429 5,766 43%
4 Camden (A) NSW 7,408 5,573 75%
5 Gold Coast (C) Qld 13,990 5,329 38%
6 Ipswich (C) Qld 8,739 5,317 61%
7 Moreton Bay (R) Qld 10,009 5,186 52%
8 Melton (C) Vic 8,177 4,849 59%
9 Greater Geelong (C) Vic 6,705 3,796 57%
10 Cardinia (S) Vic 5,042 3,204 64%
11 Hume (C) Vic 9,048 3,129 35%
12 The Hills Shire (A) NSW 5,630 3,048 54%
13 Logan (C) Qld 7,864 2,549 32%
14 Swan (C) WA 4,020 1,808 45%
15 Armadale (C) WA 3,190 1,616 51%
16 Whittlesea (C) Vic 6,891 1,556 23%
17 Port Macquarie-Hastings (A) NSW 1,463 1,418 97%
18 Brisbane (C) Qld 23,044 1,354 6%
19 Wanneroo (C) WA 4,628 1,326 29%
20 Maitland (C) NSW 2,062 1,222 59%
21 Fraser Coast (R) Qld 1,264 1,198 95%
22 Mitchell (S) Vic 1,784 1,197 67%
23 Ballarat (C) Vic 2,181 1,187 54%
24 Serpentine-Jarrahdale (S) WA 1,635 1,126 69%
25 Shoalhaven (C) NSW 1,380 1,071 78%
Matusik + ABS.  Fiscal 2019.

Table 2 outlines the top 25 local authority areas across Australia ranked by total net internal population growth during fiscal 2019.  Many of these areas either hug the coastline and/or in the outer conurbations of our four largest cities.  Only a couple are inland regional towns.

My comments

Once the current restrictions are lifted it is reasonable to accept that movements between states and territories will continue.

It is also rational to assume that – and if the household has the means – the want to live in a more desirable location has risen over recent weeks.  This might be more impulse or reaction rather than a sustainable trend, but such action could add further momentum to the recent escalation shown in chart 1.

It is also fair to accept that any continuance regarding interstate migration will follow the same established settlement patterns as shown in tables 1 and 2.

Foresight – 2020 Easter Message

It is very hard to predict a moving target.

Yet many are trying to, calling the current situation the ‘new normal’ and predicting all kinds of changes, almost all of which go against (and in some cases radically), long term trends.

Some of the talking heads – it appears to me – haven’t stopped for a second, looked in the mirror and said to themselves, does this really apply to me?  Will I do what I am saying once this episode passes? Will most (or any) of my work colleagues, friends and family do what I am suggesting?

Many of the more common suggestions – working from home, social distancing to stay, radical changes in jobs, finance and in short, the way we live – are against human nature.  Most of us are village people.  We need social interaction and not just the digital kind.

I, for one, cannot wait to get back down to our local café and the corner pub.  I am a loner by nature, but I am missing meetings, face to face conversations and even arguing.  Well if I am honest, I miss the faceoffs the most!

I also don’t like predictions.  Many want me to put a number on a future outcome.  I resist doing such as it really is guesstimating at best.  BS more likely.

I rather limit my endeavours to foresight.  I know that sounds quite up myself, but I am into trying to understand the shape of things rather than presuming their exact structure or mould.  I think that is more accurate and useful.  To understand is better than blind acceptance.

So, I will say, for example, that house prices could rise – because of these reasons (list them) and the quantum is likely, based on evidence at hand, to be between 3% and 5% over the next 12 to 18 months.  But I won’t try and be more exact than that.  I won’t say anything like prices will rise by 4.9%; yet many of my contemporaries do.

The decimal point – which seems to feature glaringly in such gibberish – I always find quite amusing.

In short predicting is a mugs game.  And more like a fool’s errand given the current circumstances.

So, when will this be over?   Will the economy recover?  What shape (an L, U, V or W) will any recovery take?  I really don’t know.  All I know is that this too shall pass.

All I want to say to you at this juncture is the following:

One, have a safe Easter.  Enjoy it the best you can.  Spend some time – online no doubt – with those that matter.

Two, my Missives, following the Easter Bunny or The Resurrection (take your pick) will continue to focus on foresight; the important housing market trends, which I believe will continue to shape the housing market and our urban landscape once this respiratory illness is better controlled.   I won’t be leaping to any short-term conclusions or joining the COVID-19 noise.

Third, I am open for business.  That business has several heads these days.  We can help you with your housing market and residential project deliberations.  Foresight remember not predictions.  And to find out more go here.

Forth, some of you want some fiscal certainty at this time of flux.  When it comes to things economic, I have a lot of time for Michael Knox.  Michael’s most recent outlook paper – relax peeps it is short, to the point and it is in plain English – is available here.  Michael is into foresight too, not just plucking numbers out of thin air.

Fifth, you are likely to have some spare time on your hands over the coming weeks.  When it comes to foresight, may I suggest the following titles.  They are well worth the read or listen.

The Optimist’s Telescope: Thinking Ahead in a Reckless Age

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist 

21 Lessons for the 21st Century

Australia Reimagined: Towards a More Compassionate, Less Anxious Society

The 100-Year Life: Living and Working in an Age of Longevity

Factfulness: Ten Reasons We’re Wrong About the World

12 Rules for Life: An Antidote to Chaos

All the best to you and yours.

Michael

Future rental demand

I wrote about demographics about a month ago – back when the world was a far less turbulent place.

That post featured a table showing the total size of the Australia market by housing buyer segmentation.

Several followers asked me if I had similar figures for the rental market.

And yes, I do.

See the table below.

Australian rental housing demand
Age range* Past decade Next decade Change
15-24 9,700 18,500 90%
25-34 16,250 8,500 -50%
35-44 2,800 10,750 290%
45-54 2,000 4,250 115%
55-64 3,900 4,000 5%
65-74 5,900 7,250 25%
75+ 3,250 7,900 145%
Total 43,800 61,150 40%
Matusik + ABS 3101.0. and 3222.0.  * Age range of the primary rental bond holder.

Past decade 2009 to 2019.  Next decade 2020 to 2030, medium series.

There is a need to build more rental properties over the next decade than the last ten years.  That lift is close to 40%.

This demand has also shifted.

We will need more rental accommodation to cater for young renters, people in their mid-30 and mid-50s and also for those in the last stage of life.

The young want to live near the action but will share accommodation.  The demand for communal rental housing solutions is already on the rise and this need is expected to grow.  More build-to-rent product is on its way.

Many of the older renters will want better quality digs.  They are after this type of stuff.

Some of our aged folks who need to rent might be best housed ‘at home’ with their children.   The same applies to many younger renters too, this time renting from their parents in either an investment property or at home.

There will be the need for more granny flats and backyard home solutions.

Working from home?

The COVID-19 coronavirus outbreak has forced many employers to consider encouraging, or even forcing, their employees to work from home.

Some are saying that this is a new trend, with many more of us – once the respiratory illness is under better control – working from home.

An in-depth survey by Roy Morgan has found that just over a quarter (29%) of Australian workers do undertake some work from home.  This is up just 1% from ten years ago.

Other surveys suggest this figure varies from 25% to 32% of the Australian workforce.  Again, this reflects people working sometimes from home.

Yet it is estimated that under 10% of the Australian workforce work at home on a permanent basis and this proportion has fallen – despite the rise in digital technology and widespread internet access – over the last decade.

Many jobs simply cannot be done from home and these include numerous retail positions, transport services, warehousing, manufacturing and most recreational and personal service occupations.

There are two industries for which ‘doing some work from home’ is reported by almost half of the workforce including finance, property and business services and communications.

I am one of the rare birds that work from home.  I have worked from home – on a permanent basis – for just under five years now.

It takes a certain type to work effectively from their home.  Let’s just say that I have no problems self-isolating.  But most do.

For mine once this black swan event eases, most – if not almost all – will go back to the previous long-term work patterns.

We are social creatures and our infrastructure (and who owns it) is centred around expensive physical assets and almost all of it involves people working together in concentrated urban centres.

Plus answering some work emails or returning a few calls – between Netflix and SBSonline binging – isn’t really working is it?

Besides imagine how much water cooler, but more likely these days, café, chit chat one would miss if they didn’t turn up to the office or other workspaces.

More importantly not turning up might even accelerate the end of one’s employment.

Many human jobs are under the pump when it comes to technology.  To many, turning up might be a sounder option than being ‘out of sight and out of mind’.

Plus, and despite reassurances to the contrary, the current climate of low growth in wages (and the economy) increasingly appears to be structural rather than cyclical.

Job opportunities are increasingly shifting to personal services and whilst a lot of personal services can be based at home they almost always involve some physical human contact outside of the home.

In addition, workers in these sectors do not get paid very much and this will see more people looking for more work.

Many will be forced to go where the jobs actually are.  Almost all of them will not be sourced or conducted from one’s home.

Don’t get me wrong more of us working from home has big urban advantages, but I just don’t see us – collectively – changing our entrenched patterns of behaviour that much once we get a grip on this respiratory infection.

This too shall pass

An emergency.  Then crisis.  Now a pandemic?

Falling confidence.  Market correction.  Talk of recession.  Social distancing.  Cancelled events.  Closed borders.  The list goes on and on.

No good news anywhere.

Panic!

There is little doubt that it is serious.

And I don’t want to make light of the coronavirus (COVID-19) but I am of the opinion – and it is just my opinion after all – that its impact will ultimately be temporary.

In the words of the infamous allegory; this too will pass.

The start of 2020 was always going to be bumpy.  The economy was slowing down in earnest during the second half of 2019.  And the recent two black swan events – local bushfires and now the coronavirus – have added further turbulence.

However, with RBA action, government incentives and now some meaningful endeavours – and with a little bit of self-control on our part too – hopefully, the second half of calendar 2020 should be better, economically, than the first half and 2021 should be stronger than 2020.

For mine it is always the property fundamentals that really matter.

The long-term view outsmarts short-term thinking.

Things that really matter when it comes to the housing market include demographics, work trends, settlement patterns, finance, taxation, regulations, compliance, affordability, and importantly supply and demand.

None of these fundamentals are likely to be substantially altered by the current virus and the ensuing fear; subsequent machinations and changing confidence.

And again, in my opinion, residential property is unlikely to be affected anywhere near as much as other property classes.  People will always need somewhere to live, and homes are the true “safe haven” in the current environment.

This sentiment may also loiter after this emergency passes.  It may even strengthen the longer the virus remains unrestrained.

It is always challenging to invest when the rest of the market is running around beheaded and worrying about the end of the world.

People much smarter and wealthier than me say that it is precisely these conditions that present the best opportunities.

So, if you have a strategy, you know what you want to do and why.  In short if you have a long-term plan, then now is an opportune time to do something about it.

I am sometimes employed to help identify future housing development sites.  These appointments always start with me asking the client to define what they are after.

It is surprising that many don’t have a clearly defined answer.

If you too would struggle with a reply, then maybe answering these ten questions is a good place to start.

The italic replies below illustrate the type of reply which would help me and should help you too.

  1. Geographic– Want to stay in Brisbane region, preferably within 10m to 25km radius of the GPO
  2. Buyer types– Downsizes and pre-retirees as owner residents, sharing as tenants
  3. Price points– Middle of the bell curve – $350k to $600k
  4. Product– Three bed minimum, two+ 1/2 bathrooms, two cars
  5. Tenure– Freehold wherever possible or low body corporate fees
  6. Project size– Site values up to $1.5m, gross realisation under $5m, 10 to 25 dwellings typically
  7. Timing– In and out within 12 to 18 months
  8. Status– Accept that exiting DAs will need to be changed
  9. Budget– 2% marketing + sliding sales commission starting with 5% sales and sliding to 3%
  10. Brand No waste, value for money, a third of our sales come from referrals.

So, again without making light of the coronavirus and its impact, if you have a plan, now is an opportune time to do what the crowd isn’t; and in this case, buy your next development site or your next home or property investment.

Of course, caveat emptor applies.

3 acronyms you should know

So, what do tenants want?

We recently asked the Matusik Missive tribe to answer this question.

We had just over 100 replies and thanks to those that took the time.

I like to number things, but acronyms can be fun too.

Here are three acronyms you should know to better understand what tenants want.

SOAP

SOAP has been around for some time and it is somewhat heartening to see that this old faithful still features high on the rental markets want list.

S = Storage

0 = Outdoor living space

A = Air conditioning

P = Parking (off street)

PIES

In recent years there has been a want for other things when it comes to rental accommodation and the PIES abbreviation sums it up nicely.

P = Pets

I = Internet (hi-speed) connectivity

E = Energy efficiency appliances and cost saving installations like solar panels

S = Security measures covering both the house (contents) and vehicles

When it came to pets, most seemed happy to a pay premium to allow them to rent with their pet/s.  Our survey confirmed the often cited 10% to 20% additional charge.  For more about this topic go here.

LEAP

Looking forward several of our respondents would like to see changes in the rental space and the four most common appeals included:

L = Longer leases

E = Easy to maintain home

A = Attention to detail

P = Policing

Many renters surveyed are looking to lock into a longer lease – more akin to a commercial lease – with a three or five year terms and set rental increases.

There is also a want to replace carpet with timber flooring (even in bedrooms) and to reduce the level of outdoor maintenance required.  These respondents seemed willing to pay a slight premium (averaging 5%) for an easy maintenance rental home and would pick such a property over one which – they think – would take longer to keep clean.

Attention to detail, is a two pronged folk.

On one prong we have renters saying that the rental managers need to improve their level of service and to remember basic details about the property they manage and the tenants occupying them when they make contact or undertake inspections.

And on the second spike, quite a few respondents complained about the small stuff – leaking taps, very worn carpet, poor painting, holes in fly screens (and walls!), windows and doors that don’t open or shut properly and other such remedial repairs.

And finally policing.  This was mostly from folks renting apartments and townhouses and their complaints were about the lack of policing the body corporate rules – noise, rubbish and parking violations were the more common grievances.

A now a few words from our survey respondents.

If I could change anything, I would have an extra car park plus more storage space.

It’s modern, easy to clean, comfortable inside and air conditioned.  Plus – it’s pet friendly.  A must for us.

We have three kids and we need enough room for all the stuff that comes with that (cricket gear, bikes, etc).

I would change the lease tenure giving renters the ability to lock in longer leases. 

Three or five lease terms would work better for us and we really want to know what rental increases are expected years in advance.

What would I change?  Replace the carpet with polished floorboards and ban morning leaf-blowing.

My building is in need of remedial work – external facade has splitting render, cracking tiles in bathroom and kitchen, efflorescence on balconies, etc.

Stricter body corporate policing is needed to keep the common areas presentable and residents plus guests using their designed parking spots.

If I could change it, I would make the outdoor living space more appealing.

Now I too would like to stop morning leaf-blowers and to be honest I had to look up what ‘efflorescence’ meant.

First home loan deposit scheme

One moment with Mike…

Has the scheme worked?

There is little doubt that the scheme was popular.  There are numbers floating around saying that 6,500 loans of the original 10,000 annual cap, are being processed.

But for mine, these 10,000 placements are already gone. 

My understanding is that they went in the first couple of days.

I know of several pending first home buyers that have been told that they missed the boat.  For now.

Given the popularity of the scheme and the associated politics, there is likely to be a further 10,000 placements released later in the year.

The 1st of July is the probable date.

So, the current scheme is a good one?

Well there are a barrage of statistics coming from the Morrison government saying who bought what and where.

But the one statistic that is missing is how many of these assisted first home buyers bought a new home.

I would be surprised if it was 10%.

The current price caps largely ensure that second-hand properties were purchased. 

What would you change?

The current scheme, like most previous first home buyer initiatives, is good politics but poor policy. 

All that has happened really is that prices are being keep artificially high, resulting – over the medium to long term – in less first home buyers entering the market than would be the case if no first home buyer incentives where introduced.

Such action is of course eroding housing affordability.

I think that if this deposit scheme is to continue then it should be used as a housing policy and only apply to new dwellings.

I would also remove all caps – being purchase price and household income parameters –  too.

But I would apply a strict rule and police it hard.

What would that rule be?

Many first home buyers – in some instances it exceeds 20% in select areas or new housing projects  – use such initiatives to buy, then in 6 to 12 months’ time rent it out and move back in with mum and dad or rent another property.

I have developer clients telling me that this has been the norm for some time. 

Any first home initiative must see the recipient live in that property for at least five years.

If the recipients of such as scheme, sell the property for a gain or rent the property, within that five year period then they have to pay back the monies gifted and with a commercial rate of interest. 

Any final comments?

Lenders need to acknowledge the scheme exists and not discount the property’s value or increase the interest rate or apply mortgage insurance because a first home buyer has accessed government deposit assistance.

First home buyers also need to understand that they have to have their finances in order before they apply. This wasn’t very well defined in the lead up to the current scheme’s release in January.  That communication also needs to be improved.

Demographics, stupid

James Carville, allegedly, helped win the Presidency for Bill Clinton in 1992 with a sign in the campaign’s headquarters saying, “The economy, stupid”.

Well maybe there should be a sign saying – “Demographics, stupid” – on our desks as well.

Many in the economic, town planning and property space, including investors, tend to ignore or underplay the influence of demographic factors over the short and medium term.

But demographics matter.

Look at the table below.

Australian housing demand

Lifecycle housing segment

Annual housing demand

Description

Age range

Past decade

Next decade

Young renters

15-24

11,820

8%

20,410

13%

First home buyers

25-34

27,550

19%

13,090

9%

First upgrade

35-44

7,800

6%

23,700

16%

Second+ upgraders

45-54

7,500

5%

10,360

7%

Downsizers

55-64

21,620

15%

8,900

6%

Retirees

65-74

39,180

28%

23,830

16%

Aged

75+

26,190

18%

52,380

34%

Total

141,660

100%

152,670

100%

Matusik + ABS 3101.0. and 3222.0. 

Past decade 2009 to 2019.  Next decade 2020 to 2030, medium series.

There is a need to build more homes over the next decade than the last ten years. 

But not only has the demand lifted, it has shifted too.

We will need more new homes catering for the young and the old, with less for the age groups in between. 

That suits those suppling downtown units, infill town homes, smaller suburban apartment complexes and retirement villages. 

It also suits the provision of granny flats and backyard home solutions. 

Much of this new housing supply will also need to cater for local demand, especially when it comes to older residents. 

The irony is that that many ageing residents don’t want to see their suburbs change to cater for their future housing needs.  Local councils are often quick to agree. 

Of course, stamp duties also halt local housing moves.

In addition, the size of the first home buyer cohort is expected to decline, whilst the need for more homes that cater for families upgrading should rise.

Yet there is a focus on first home buyer benefits.  Many local authorities are looking to restrict infill development and implement financially unviable car parking regulations. Whilst stamp duties are too high and property investment incentives too lax.

Our energies seem wrong. 

Maybe a “Demographics, stupid” sign isn’t that stupid after all.

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