Policy: Planning

Population Update

Posted on by Angie Zigomanis

A quick snapshot of the September 2024 National Population data release last week by the Australian Bureau of Statistics suggests that Australia’s crazy rate of population growth is beginning to moderate.

  • Net overseas migration (NOM) fell to 89,800 in September quarter 2024. Total NOM for the year to September 2024 was 380,000, 29% below the F2023 level of 535,500. Lower arrivals and rising departures both contributed to this reduction. While movements are starting to ‘normalise’, NOM is still tracking to be above pre-COVID levels in FY2025.
  • Some 79,000 persons moved interstate in the quarter, down by 5% on September quarter 2023. Interstate mobility continues to decrease. Low unemployment, tight rental markets and a reduced house price differential between the states have reduced the influence of the traditional drivers of interstate migration. QLD and WA continue to experience net inflows, while VIC has now recorded two (modest) net inflows in the past three quarters. The net outflow from NSW decreased slightly reflecting the diminishing affordability of the destination states of QLD and WA relative to Sydney.
  • The 76,800 registered births in the quarter were the highest quarterly total for some years but were influenced by the timing of registrations in Victoria. Births in the year to September 2024 (291,200) were on par with the prior twelve months (290,900). Australia’s total fertility rate (births per female) was 1.49 in FY2024, having fallen from 1.67 in FY2019. Flat births and further population growth suggest the fertility rate will drop further in FY2025.
  • The number of deaths increased to 51,575 in September quarter 2024, the highest since September quarter 2022 when limited preventative care through COVID lockdowns caused deaths to subsequently spike.

A falling birth rate and rising deaths saw the natural increase fall to 104, 200 in the year to September 2024. This is nearly one quarter below the pre-COVID level of around 140,000 per annum. Deaths are now outpacing births for the first time in Tasmania, which recorded a negative natural increase.

Australia’s population grew by 484,000 in the year to September 2024, dropping below 500,000 per annum for the first time since 2022. NOM has been moderating at a pace slightly faster than suggested by the monthly overseas arrivals and departures data published by the ABS. Nevertheless, NOM for FY2025 is still likely to come in a little above the 320,000 projected by the Centre for Population.

Slowing NOM and population growth will provide some relief for rental markets. However, new dwelling completions are expected to remain below underlying demand over at least the next year or two and this will continue to maintain pressure on rental vacancies.

For further insight into what the implications of population growth nationally and across the states, contact Angie Zigomanis at angie.zigomanis@quantifysi.com.au or Rob Burgess at rob.burgess@quantifysi.com.au

Household sizes on the rise as affordability challenges bite

Posted on by Angie Zigomanis

Understanding trends in household formation is important to understanding how population growth translates to housing occupancy and new dwelling demand.

The COVID-lockdown period and immediate aftermath saw big changes in living situations in Victoria that are now steadily unwinding.

  • Growth in the population living in group households, as related individuals (typically siblings), and as non-dependent children (adult children in the family home) began at the end of lockdowns in 2021 but has accelerated over the past 18 months or so.
  • Meanwhile, the growth in lone person households that began during the pandemic lockdowns appears to have plateaued since the end of 2022.
  • Population in couple without children households also showed a similar rising trend, but is decreasing in 2024 – potentially reflecting the increase in adult children in the family home.

The fall in average household sizes that occurred through the COVID pandemic is now reversing. Quantify Strategic Insights estimates the net effect is that annual household formation in Victoria has reduced by around one third, from a peak of just over 90,000 additional households in the year to April 2023, to around 60,000 in the year to June 2024. This compares with the 55,000 or so dwellings completed in Victoria in FY2024.

The market is doing what markets do. Rising rents and prices due to the imbalance between demand and supply is rationing demand. Any immediate uptick in supply is unlikely, while the jury is also out on the rate at which population growth will slow and reduce demand. ‘Economics 101’, therefore, suggests that household formation will be further constrained, with rents only stabilising when they reach a ‘market clearing’ level that balances demand and supply. The question is how much further household structure in Victoria will change before rents stabilise?

From a policy perspective, the key challenge is to balance flexibility with foresight in responding to both market-driven changes in household behaviour and long-term population growth. As a starting point, monitoring trends in household composition is vital if policy is to enable delivery of the number, and type of housing required, and to ensure that changes in household formation are accounted for.

For more analysis on trends in demographic change and impacts on the housing market, contact Rob Burgess or Angie Zigomanis.