Changing demographics will stimulate our real estate markets

Property markets are driven by our Australian demography: who we are, how we live, and where we want to live.
BY MICHAEL YARDNEY

Sophisticated property investors are student demographics, so I found a recent report by Goldman Sachs, research on Australian Housing: unique opportunities or bubble?, interesting to understand the various forces, driving our housing markets.

In short, he says, we set the stage for chronic housing shortage due to a combination of two factors:

1. our growing population and;

2 more people in key household formation age 25-29 years of age.

The report notes that Australia's population is growing by about 2% Apr, which is faster than any other developing country. In fact, we grow at speeds of more representative of a developing country than rich developed countries.

Despite the fact that we have the baby boomers, two thirds of the population increase is due to immigration. Sure, it's now slows, but the trouble is that in the past six years, we have not built in sufficient numbers to meet the needs of the population of our surging. Just as importantly, the report explains how will change our changing demographic housing landscape in the future as we are experiencing great changes in demand for housing, as children of the baby boomers will hit household formation age.

According to Goldman Sachs over the past five years, there has been a surge of growth in the age group 25-29 – which grows on the average 3.7% each year. This results in an average annual growth rate of 2.7% aged 30 to 34 years during the five years to 2016.

This sharp increase, considering these two age groups in the average growth rate of 0.3% Apr for 15 years until 2006.

The report estimates that grabs national about 157 000 housing now and estimate housing deficit will rise to 250 000 units by the end of 2012. Of course, this type of claim is nothing new and is in line with the reports of other economists, including study of the national housing supply Council.

One of the reasons I'm sure our property markets did not collapse as some foreign economists, inviting the permanent housing shortage.

But don't get me wrong, it doesn't mean that real estate prices will keep growing. I see 2011 as the year when our property markets catching their breath after a year or more heady growth.

And a shortage of homes doesn't evenly.

We build enough House and land packages in a suburb outside, we are heading towards an overabundance of high-rise urban apartments. Where we lack the property is located in our inner and middle-ring suburbs, where developers can't get density projects out of the ground, but where there is high demand. This is where the property will be in 2011.

Michael Yardney – Director of Metropole property investment strategists, best-selling author and one of Australia's leading experts in the creation of wealth through property. Subscribe to the online magazine at www.propertyupdate.com.au. For more information about Michael, visit www.metropole.com.au.

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