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Wednesday 28 June 2017

Demographic tsunami

Demographic destiny

Although we like to think we're all very different, in generally speaking we tend to do quite predictable things are predictable times in our lives.

Hence the old saying: "Demographics is destiny".

I had some interesting feedback on my reporting of yesterday's Census news. Thanks.

Let's look a snout at another tier of the statistics today...

One for the ages

Dicing up Australia's population pyramid by age and it appears that there has been a fairly smooth increase of about 1.4 million in the 25 to 55 age cohort over the past decade - mostly the types of people that buy and sell housing.

Reaching over for my compound interest table tells me that is an increase of about 1.5 per cent per annum. 

The devil is in the detail, though. 

The last decade was not a strong one for the housing market in demographic terms, but after adjusting for the new figures from the 2016 Census we can see that's about to change. 

Australia's median age has continued to rise steadily from 23 at the time of the 1911 Census to 37 a century later, and up a notch further in 2016 to 38 it was confirmed yesterday.

Australia's migration and visa programmes have therefore become largely tilted towards the under 30s, and, more lately, to international students.

And to be clear it's immigration that's been driving the recent acceleration in population growth, not births.

Splitting out the Census figures by year of age thus reveals a significant demographic wave of the resident population about to move towards the typical homebuying age. 

As noted, the devil is always in the detail, and you need to drill down a level to get the really interesting stuff. 

For example, Sydney and especially Melbourne have a comparatively high share of their population pyramid sitting squarely in the 25 to 34 age brackets, but in Adelaide and regional South Australia the equivalent share is much lower, and so on. 

Even just rolling forward the demographic wave based on today's numbers it's clear that there is a monster surge in housing market demand on its way in due course. 

Project forward the recent surge in immigration, and it's likely to be stronger still.

But where will the demand actually be directed to, and towards what types of property? And will those property types and locations be under- or over-supplied?

Well, that's one for a future blog post.