Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Friday, 23 September 2016

Skyscraper boom

Population boom

Victoria's population growth has exploded, the state's headcount increasing by a thunderous +38,808 in the first three months of 2016 alone.

In fact, total population growth in Victoria has accelerated away to such an extent that even in the face of record apartment approvals and a surge in dwelling starts vacancy rates in Melbourne have been tightening

A chart of the ratio of population growth to dwelling completions explains why - on this metric dwelling completions are actually tracking below their long run average. 

Throw in the number of potentially empty apartments owned by non-resident Chinese investors and the head-scratching equation is solved.


Of course, there is a record number of apartments presently under construction in Australia, so Melbourne's supply will catch up to demand eventually, probably in 2017 (at least in aggregate, though the supply delivered will be horribly mismatched). 

In New South Wales too, after years of under-building the ratio of population growth to completions was still tracking above the long run average by March 2016. 


However, with interstate migration to Queensland picking up, by today in September we have probably now some way closer to crossing the supply/demand rubicon for this Sydney property market cycle.

In previous cycles when the ratio sank below 1.5 the Sydney market was flooded with supply.