<p>Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.</p>

<p>Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;</p>

<p>David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;</p>

<p>“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;</p>

<p>[smartcode_project:default project_id=110291 project_image_fid=302785]</p>

<h2>Affordable product leads, premium demand remains resilient</h2>

<p>Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;</p>

<p>Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;</p>

<p>At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.</p>

<p>Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.</p>

<p>Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;</p>

<p>[smartcode_project:default project_id=148957 project_image_fid=364102]</p>

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

<p>Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.</p>

<p>David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.</p>

<p>“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;</p>

<p>Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.</p>

<p>[smartcode_project:default project_id=108869 project_image_fid=317905]</p>

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

<p>While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;</p>

<p>Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;</p>

<p>However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.</p>

<p>Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;</p>


Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<p><a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.</p>

<p>The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.</p>

<p>Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.</p>

<p>“Brisbane was the right step for Sammut,” Sammut said.</p>

<p>“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" /></p>

<p>Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.</p>

<p>The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.</p>

<p>“We are DA approved now which is very exciting,” Sammut said.</p>

<p>“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" /></p>

<p>Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.</p>

<p>“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.</p>

<p>The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.</p>

<p>“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”</p>

<p>The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.</p>

<p>The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.</p>


Sammut secures approval for debut Brisbane apartment development in Toowong

<p>Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.</p>

<p>Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.</p>

<p>The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.</p>

<p>“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.</p>

<p>“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.</p>

<p>“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”</p>

<p>The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.</p>

<p>“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”</p>

<p>From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.</p>

<p>“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”</p>

<p>The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.</p>

<p>“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.</p>

<p>Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.</p>

<p>“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.</p>

<p>“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”</p>

<p>The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.</p>

<p>“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.</p>

<p>Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.</p>

<p>&nbsp;</p>


Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

<p>Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.</p>

<p>The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.</p>

<p>It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.</p>

<p>With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.</p>

<p>“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.</p>

<p>“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" /></p>

<p>GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.</p>

<p>“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”</p>

<p>Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.</p>

<p>“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" /></p>

<p>&nbsp;</p>

<p>One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.</p>

<p>Green praised local policy settings.</p>

<p>“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”</p>

<p>One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.</p>

<p>“The way we will be able to achieve economies of scale is through size,” Green added.</p>


One Living enters Sydney's new apartment market with Northern Beaches site acquisition

<p>It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.</p>

<p>Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.</p>

<p>Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be</p>

<p data-end="683" data-start="511">"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.</p>

<p data-end="882" data-start="690">"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."</p>

<p data-end="882" data-start="690">[smartcode_project:default project_id=134646 project_image_fid=6109]</p>

<p>The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.</p>

<p>The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.</p>

<p>Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6110]</p>

<p>Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.</p>

<p>The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6116]</p>

<p data-end="247" data-is-last-node="" data-is-only-node="" data-start="0">While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.</p>

<p>WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.</p>

<p>With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.</p>

<p>[smartcode_project_cta:default project_id=134646]</p>


WM Residences fills gap in Mordialloc townhouse market

Population Growth

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<p>The Australian Bureau of Statistics (ABS) released demographic data for the March 2015 quarter earlier today. The data showed that despite a quarterly bounce in population growth, the rate of growth continues to trend lower.</p>
<p>The national population increased by 1.35% over the 12 months to March 2015 which was the lowest annual rate of growth in nine years. Although growth slowed it should still be noted that Australia’s population increased by 315,952 persons over the past year. Although population growth has slowed it remains well above the long term average of 256,801 per annum.</p>
<p><a href="/images/2015/09/25/Chart-13.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/09/25/Chart-13.jpg" alt=""></p>
<p><span>Over the March 2015 quarter, the national population increased by 93,942 persons, substantially higher than what was recorded over the December 2014 quarter when the nationally population recorded an increase of 64,010 persons.  Over the 12 months to March 2015, the national population increased by 315,952 persons which is the lowest annual increase in population since the 12 month period ending June 2011 when the nation recorded population growth of 308,274 persons.</span></p>
<p><a href="/images/2015/09/25/Chart-23.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/09/25/Chart-23.jpg" alt=""></span></p>
<p><span>At a national level there are two components of population growth, natural increase (births minus deaths) and net overseas migration. Each of these measures recorded a bounce over the past quarter however, both components continue to trend lower on an annual basis. Over the 12 months to March 2015 natural increase was recorded at 142,898 persons and net overseas migration was recorded at 173,054. Natural increase was -9.7% lower over the year while net overseas migration was -16.0% lower, its largest annual fall since March 2011.  </span></p>
<p><span>While the decrease in the rate of natural increase implies a sharp rise in deaths or slowdown in births, it is important that the ABS has noted that there are problems with the preliminary natural increase estimates due to a lag in registering births in both NSW and Vic.  We are likely to an upwards correction to this data over the coming quarters which will lift the rate of population growth.</span></p>
<p><a href="/images/2015/09/25/Chart-32.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/09/25/Chart-32.jpg" alt=""></span></p>
<p>Across the states and territories the rate of annual population growth is lower compared to the same time a year ago across the board. Although population growth is slowing, the sharpest slowdown in population growth is being felt in WA and NT. In WA the rate of population growth has slowed to 1.4% over the year to March 2015 from 3.5% two years earlier.  Similarly, annual population growth in the NT was 3.0% two years ago and the latest data shows it at just 0.2% over the past year.</p>
<p>Looking at the components of population growth we will ignore natural increase at this juncture because the ABS have highlighted some issues with the data for NSW and Vic. The two other drivers of population growth at a state and territory level are overseas migration and interstate migration.  NSW and Vic are the major benefactors of net overseas migration to Australia while Vic and Qld are the only benefactors of interstate migration.</p>
<p><a href="/images/2015/09/25/Chart-4.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/09/25/Chart-4.jpg" alt=""></p>
<p><span>Over the 12 months to March 2015, net overseas migration to Australia was recorded at 173,054 persons. More than two thirds of net overseas migration flowed to NSW (38.9%) and Vic (31.6%). If you add in Qld (12.1%), the three most populous states accounted for 82.6% of net overseas migration. Although net overseas migration is trending lower, the impact of the end of the mining boom is very clear. In March 2013, annual net overseas migration was recorded at 41,745 persons in Qld, 53,834 persons in WA and 5,173 persons in NT. Over the past year, annual net overseas migration had slowed to 20,857 persons in Qld, 15,383 persons in WA and 1,041 persons in NT.  </span></p>
<p><span>Conversely in NSW where mining is a smaller part of the overall economy, net overseas migration has actually increased from 63,661 persons in March 2013 to 67,272 persons in March 2015. Similarly in Vic net overseas migration has been much stronger over the past 2 years, falling slightly from 55,562 persons to 54,745 persons. Of course while most of the overseas migration is coming to NSW and Vic, most of that is flowing into Sydney and Melbourne fuelling more demand for housing and helping to explain why home value growth in those two cities has been so strong.</span></p>
<p><a href="/images/2015/09/25/Chart-5.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/09/25/Chart-5.jpg" alt=""></p>
<p>At a national level net interstate migration cancels itself out and does not add to population growth however, at a state level it can greatly impact on population growth. Over the past 12 months, only Vic (9,774 persons) and Qld (6,195 persons) have seen a positive inflow of residents from other states. In fact, net interstate migration into Vic is currently at its strongest level on record. Qld has recorded a slight rebound in net interstate migration however, it continues to hover around its lowest level on record. For the length of this data series (since 1981) NSW has consistently lost residents to other states and that remains the case losing 6,195 residents over the year. </p>
<p>The outflow of residents from NSW is hovering at around record low levels. WA has typically been a benefactor of interstate migration however, it lost a net -1,269 residents last year; its greatest loss since June 2003. Again we can see the impact of the slowing of the resources sector. In March 2013, net interstate migration was recorded at a higher 9,026 persons in Qld and 9,691 persons in WA. Conversely, net interstate migration at that time was recorded at -15,513 persons in NSW and 3,454 persons in Vic.</p>
<p>The trends in overseas and interstate migration in particular show that the population growth tide has turned away from the mining states and is now firmly focussed on NSW and Vic which have relatively little mining sector exposure. These states are also creating more employment opportunities and are subsequently attracting both people migrating from overseas and interstate. Higher population growth means more demand for housing, which is one of the drivers pushing dwelling values higher in Sydney and Melbourne.</p>
<p>The more up-to-date overseas arrivals and departures data from the ABS indicates that permanent and long-term arrivals into Australia have continued to trend lower since March 2015. This indicates that net overseas migration is expected to continue to trend lower over the coming quarters. It is also likely to result in more of these migrants wanting to move to NSW and Vic due to the fact that these are the states where more jobs are being created.</p>
<p>This is of course despite the fact that the two capital cities in these two states recording home value growth which is well in excess of growth elsewhere.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.</em></p>
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ckusher-ujnxiKuFQs

Population growth slumps to its slowest rate in nine years: Cameron Kusher

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<p style="line-height: 1.3em;">GUEST OBSERVATION</p>
<p style="line-height: 1.3em;">Australia’s population growth has typically lagged the economy’s fortunes – people vote with their feet. Rising unemployment typically results in a slowing in net immigration and population growth (typically with a lag), and vice versa (Figure 1).</p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;">We are seeing this currently as sluggish growth in activity has resulted in a slowing in population growth. We discuss a few reasons why net immigration and population growth may have already slowed by more than official figures suggest. </span></p>
<p style="line-height: 1.3em;"><a href="/images/2015/08/10/Screen%20Shot%202015-08-10%20at%204.28.43%20PM.png" target="_blank"><span style="line-height: 1.3em;">Click to enlarge</span></a></p>
<p style="line-height: 1.3em;"><span style="line-height: 1.3em;"><img src="/images/2015/08/10/Screen%20Shot%202015-08-10%20at%204.28.43%20PM.png" alt="" width="844" height="515"></span></p>
<p style="line-height: 1.3em;"> </p>
<p style="line-height: 1.3em;"><a href="/images/2015/08/10/Screen%20Shot%202015-08-10%20at%204.30.04%20PM.png" target="_blank">Click to enlarge</a></p>
<p style="line-height: 1.3em;"><img src="/images/2015/08/10/Screen%20Shot%202015-08-10%20at%204.30.04%20PM.png" alt="" width="737" height="470"></p>
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<p><span>Australia’s population growth slowed to 1.4% y/y, on current estimates, at the end of 2014 from a peak of more than 2% y/y prior to the GFC. Lower net immigration has contributed most to the slowing but births have also fallen (see page 4) (Figure 3). </span></p>
<p><span>Monthly overseas arrivals and departures data suggest that net immigration slowed further in H1 2015 (Figure 4). In fact, on a sequential basis, </span><span>population growth already looks to have dipped towards 11⁄4% </span><span>at end 2014 in annualised terms. </span></p>
<p><span>The slowing in population growth has been </span><span>most pronounced in the mining states </span><span>of Western Australia, Queensland and the Northern Territory (Figure 5). These states have also seen sharp slowings in 457 visa (Temporary Work (Skilled)) applications which allow recipients to stay in Australia for up to four years. This indicates that slower economic activity and </span><span>reduced job opportunities in these states has been an important reason for the overall slowing in net immigration</span><span>. This has taken pressure off unemployment from rising faster than it has in these states. </span></p>
<p><span>Historically, swings in population growth have </span><span>tended to lag changes in economic momentum</span><span>. To illustrate, population growth has typically slowed as the unemployment rate has risen, and vice-versa (the one exception being the late 1980s where population growth slowed in advance of the economic cycle) (Figure 6). </span></p>
<p><span>The slowing in population growth underway therefore largely reflects weaker economic activity. </span><span>From a labour market perspective, slower population growth can be thought of as ‘shock absorber’. It limits upward pressure on the unemployment rate to the extent that it reflects a slower rise in the supply of available workers. </span><span>A large share of the slowing in net immigration has been among the prime working age </span><span>(25- 44 year olds). Fewer arrivals British and other European citizens in this age bracket have accounted for half of the decline in permanent and long-term arrivals to Australia since 2012. </span></p>
<p><a href="/images/2015/08/10/Screen%20Shot%202015-08-10%20at%204.31.50%20PM.png" target="_blank"><span>Click to enlarge</span></a></p>
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<p> </p>
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<p><span>Measuring population growth accurately in real time is difficult and we suspect that it could be revised lower due to downward revisions to net overseas migration (NOM) over time. </span></p>
<p><span>The ABS count persons as being in the resident population if they are in Australia for at least 12 months in a 16 month period. The problem is that this cannot be known in real time and the ABS cannot produce ‘final’ NOM and population estimates until 21 months after the relevant quarter.</span><span>1 </span><span>In the interim its </span><span>preliminary estimates of NOM are subject to revision </span><span>which can sometimes be large (Figure 7). In fact, </span><span>NOM and population growth have already been revised lower </span><span>since its most recent peak. This could be due to the way the ABS calculates preliminary estimates of NOM. </span></p>
<p><span>To estimate NOM the ABS uses passenger card information combined with propensities from the year before for groups of individuals to ‘NOM in’ or ‘NOM out’. Revisions to NOM can therefore occur if these propensities are changing quickly which may occur if net migration flows are changing rapidly as is currently the case. </span></p>
<p><span>Net immigration has already been slowing faster than expected. </span><span>For instance, ABS estimates of NOM have already significantly undershot the latest estimates/forecasts by the Department of Immigration made in mid 2014, particularly on the departures side (Figure 8). Net immigration from New Zealand has slowed more sharply than expected as unemployment had been falling across the Tasman but rising in Australia (Figure 9). </span></p>
<p><span>More important, however, has been the much weaker-than-expected decline in net immigration of persons on Working Holiday and Work &amp; Holiday visas and the slowing in net immigration of workers on 457 visas, both reflecting the softness of Australia’s labour market (Figures 10 and 11). </span></p>
<p><span>Finally, net immigration may be weaker than official estimates because </span><span>published (final) NOM figures have historically overstated net immigration. </span><span>Given births and deaths can be measured relatively accurately, and total population estimates are provided by the Census every five years, a more accurate estimate of net immigration is calculated as population growth less natural increase. Figure 12 shows that this residual measure of NOM has been lower than published NOM. </span><span>If history is any guide, therefore, the availability of 2016 Census figures could lead to further downward revisions to NOM and population growth. </span></p>
<p><span>In summary, these factors suggest </span><span>net immigration and population growth have already slowed by more than official figures suggest. </span></p>
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<p><span>THE OUTLOOK FOR POPULATION GROWTH </span></p>
<p><span>Population growth is expected to slow a little further in the near term as lags from slower economic activity feed through. </span><span>Over the next five years, it seems likely that population growth will average 11⁄4-11⁄2% per annum (the RBA is now assuming 11⁄2% over the next few years). This would be much slower than growth experienced in recent years but still faster than the 1.1% per annum average growth rate from 1992 to 2006. As net immigration slows, nearly half of Australia’s population growth is again likely to come from natural increase, although this is also slowing. </span></p>
<p><span>NATURAL INCREASE </span></p>
<p><span>The number of births has moderated again in recent years after a brief spurt and is expected to slow further. </span></p>
<p><span>The contribution of natural increase – births less deaths – to population growth steadily declined over time until the mid 2000s (Figure 2). More births then supported population growth as the number of 25-34 year old females – those with the highest fertility rates – rose sharply after being little changed for more than a decade (Figure 13). </span></p>
<p><span>The number of births and natural increase in the population is already slowing. It will slow further as much weaker growth over the past five years in the number of 20-24 year old females will result in slower growth in the population of 25-34 year old females. </span></p>
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<p><span>NET IMMIGRATION </span></p>
<p><span>Unless there is a persistent improvement in labour market conditions, it is difficult to see net immigration increasing in the foreseeable future. </span><span>While some further slowing in net immigration is expected in the near term, we expect it to then stabilise due to: (i) fewer outflows to New Zealand; (ii) a still high official immigration programme; and (iii) strong international student inflows. </span></p>
<p><span>First, the relative strength of the New Zealand economy, which has resulted in a small outflow of people from Australia across the Tasman, is diminishing. The jobless rate in New Zealand has increased recently amid more moderate economic activity and the increase in labour supply (Figure 14). This could see at least a </span><span>stabilisation in net immigration between Australia and New Zealand </span><span>if not some turnaround. </span></p>
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<p><span>Secondly, the intake under </span><span>Australia’s official Migration Programme has been kept at 190,000 persons for 2015-16</span><span>. While this level of official migration in recent years has not prevented net immigration from moderating, it will limit its rate of decline by, to some extent, putting a floor under immigration levels (Figure 15). </span></p>
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<p><span>Finally, </span><span>strong growth in international student arrivals is supporting net immigration</span><span>. As long as students satisfy the ‘12/16’ rule they are counted as residents for population purposes and many stay in Australia after graduation. </span></p>
<p><span>The number of </span><span>international student commencements has reached the previous peak in 2009 </span><span>when its contribution to net immigration peaked at around 120K persons per annum (Figure 16). Department of Immigration forecasts, which appear broadly on track, suggest a similarly large contribution to NOM over the next few years which would add 0.4ppts to annual population growth. (Students may add less to potential labour supply than other immigrants, however, as they are limited to working 20 hours per week while studying.) </span></p>
<p><span>This trend is being supported by the weaker Australian dollar, streamlined policies towards overseas students and rule changes that allow overseas students to extend their stay for two to four years upon graduation under a Temporary Graduate visa. </span></p>
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<p><span>IMPLICATIONS OF SLOWER POPULATION GROWTH </span></p>
<p><span>Potential growth and interest rates </span></p>
<p><span>In the medium-term, one implication of slower population growth is lower potential output growth through weaker growth in both demand and supply. Given the aging population, potential labour supply growth would be even slower absent a persistent increase in labour force participation. </span></p>
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<p><span>Assuming annual productivity growth around its long-run average of 11⁄2%, potential output growth could fall closer to 23⁄4% per annum over the medium term, well below the 3–31⁄4% widely assumed previously. While it’s per capita growth that ultimately determines standards of living, </span><span>lower potential GDP growth would imply lower interest rates than otherwise </span><span>(Figure 17). </span></p>
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<p><span>Housing demand </span></p>
<p><span>One source of slower potential output growth is that </span><span>slowing population growth would, over time, reduce underlying demand for housing. </span><span>While several years of underbuilding means that there remains excess demand for housing, particularly in Sydney, smaller increases in the population will eventually result in weaker housing demand. </span></p>
<p><span>In this regard, </span><span>relatively small changes in population growth matter for housing demand. </span><span>For example, annual population growth of 11⁄4% would add around 125k less people per annum to the population compared with growth of 13⁄4% (Figure 18). Assuming 2.5 persons per household, this would mean housing demand drops by roughly 50k dwellings per year. </span></p>
<p><span>A complicating factor is that international students are expected to account for a noticeable share of population growth in the near term. As mentioned recently by the RBA, demand for housing from students may be different to that from other immigrants, including because they have lower incomes and are typically younger. They are also likely to demand housing close to universities and apartment living rather than detached housing. The composition of student arrivals, however, may also have a bearing on the type of housing sought. </span></p>
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<p><em>Justin Fabo is senior economist, ANZ. You can follow him on Twitter <a href="https://twitter.com/justinfabo" target="_blank">here</a>.</em></p>
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jchancellor-FAypfDUnLy

Australia's sluggish population growth: Justin Fabo

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<div>The latest <a href="https://www.abs.gov.au/ausstats/abs@.nsf/mf/3401.0/" target="_blank">Overseas Arrivals and Departures</a> data for the month of June 2015 confirmed that population growth in Australia will be once again be slower in this calendar year.<br><br>As I argued a year ago, by the third quarter of 2014 it had become evident that the assumption reported widely in the media that the population of Australia would boom by around 2.4 million persons over the next six years was too high - much too high, in fact!<br><br><div class="separator"><a href="https://1.bp.blogspot.com/-ZK9-CCXjNWs/VcWS2tAESjI/AAAAAAAAXd0/LM0ux2QIp00/s1600/A1.jpg"><img src="https://1.bp.blogspot.com/-ZK9-CCXjNWs/VcWS2tAESjI/AAAAAAAAXd0/LM0ux2QIp00/s400/A1.jpg" width="400" height="65"></a></div>
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<div>In the event population growth slowed considerably to be up by an estimated +330,200 in 2014, and population growth will be slower again in 2015.<br><br>Over the longer term we might indeed expect to see much stronger levels of population growth return for the reasons I have already explored, but for the foreseeable future lower population growth will be the new norm.<br><br>Let's take a look at the implications of the latest figures in three parts.<br><br>
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<p><strong><span style="text-decoration: underline;">Part (i) - Slowing immigration nationally</span></strong><br><br></p>
<div>The number of long term arrivals into Australia has slowed further over the past year, and consequently net long term migration has pulled back to +292,000 on a rolling annual basis, sliding from a recent peak of more than +400,000.</div>
<div> </div>
<div>This suggests that population growth in 2015 will likely slow further perhaps to around +300,000 persons from +330,200 in 2014.</div>
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<div class="separator">One of several key potential drivers of this trend has been the sharp reduction in the number of permanent settlers from New Zealand.</div>
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<div class="separator">Meanwhile the number of permanent settler Brits has slowed to a mere trickle - just 470 settlers in June hailed from the United Kingdom, the lowest monthly figure across the full 25 years of available data.</div>
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<div class="separator">Kiwi citizens can move freely between Australia and "home" and as such are theoretically far more sensitive to shifts in labour market conditions.</div>
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<div class="separator">And while spare capacity in the labour market has being rising over the past three years in Australia, it had been tightening for some time in New Zealand.</div>
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<div class="separator">With mining construction activity now slowing sharply in Australia - and Christchurch in New Zealand seeing a high volume of reconstruction activity - it is perhaps unsurprising that fewer New Zealanders are making the trans-Tasman trip on a permanent footing (although a record 1.27 million still came to Australian shores on a short-term basis over the past year).</div>
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<div class="separator">On the other hand the number of settlers from countries such as China and India continues to slowly but surely break new heights.</div>
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<div class="separator">Indeed, the overwhelming majority of settlers in Australia now hail from Asia, with the middle east the only other region or continent presently in a confirmed uptrend.</div>
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<p><strong><span style="text-decoration: underline;">Part (ii) - Record visitors to Australia</span></strong></p>
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<div>There is a flip side to the softer pace of growth in Australia's economy, and that is that falling interest rates and a correspondingly weakening currency have encouraged the tourism sector to attract a record number of short term arrivals Down Under. </div>
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<div>This year the rolling annual number of short term arrivals blasted past 7 million for the first time to a record 7.12 million in the 2015 financial year (denoted by the blue line below).</div>
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<p><span style="line-height: 1.3em;">While the corresponding drag on overseas travel by Australians has only been fairly gradual to date (denoted by the red line above), the weaker dollar also means that over time comparatively fewer Aussies will be inclined to make overseas trips, which in turn will act as a further boost for the domestic economy. </span></p>
<div>I holidayed on the Sunshine Coast myself in the past week, and it is quite evident that more Aussies are inclined to hang out in locations such as Noosa over the winter than has been the case in recent years.<br><br>After all, travelling overseas is not <em>quite</em> as much fun as when the dollar was at sky high levels just a few years ago!</div>
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<div>Accordingly the ratio of short term departures to short term arrivals has steadily been trending down for the past two years.</div>
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<p><span style="line-height: 1.3em;">One trend which is definitely </span><strong style="line-height: 1.3em;"><span style="text-decoration: underline;">not</span></strong><span style="line-height: 1.3em;"> slowing down is the number of Chinese visitors to Australia with more than 1.25 million visitors from China, Taiwan and Hong Kong over the past 12 months, with the latest figures showing no signs of this emerging mega-trend easing off.</span></p>
<div>A record 563,800 Americans have also enjoyed the dramatic shift in the exchange rate over the past year.</div>
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<p><span style="line-height: 1.3em;">Furthermore there has been an explosion in the number of foreign students in Australia - also largely hailing from Asia - another trend which has in part been driven by exchange rate movements. </span></p>
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<p><span style="line-height: 1.3em;">This is an emerging demographic trend which will impact Sydney and Melbourne most keenly.</span><span style="line-height: 1.3em;"> </span></p>
<div class="separator">The full impact of the depreciation of Australia's currency has yet to flow through to this data and we will certainly now see further short visitor records broken in the year ahead.</div>
<p><strong><span style="text-decoration: underline;">Part (iii) - 3 implications of lower population growth</span></strong></p>
<p><span style="line-height: 1.3em;">So what are the impacts of slower population growth in Australia, which could continue for the foreseeable future? </span></p>
<div>There will be many impacts, of course, but here are just three of the most prominent observations.</div>
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<div>Firstly, and most obviously, slower population growth will equate to lower demand for goods and services, which in turn over time should result in <strong><span style="text-decoration: underline;">lower economic and employment growth.</span></strong><br><br>Over the next few years there will be a lower than expected requirement for investment in building offices, warehouses, housing, machinery, plant and equipment. </div>
<p><span style="line-height: 1.3em;">Secondly, with employment growth having tracked at an estimated 2.1% or 243,600 new jobs over the past year - which is considerably faster than the estimated rate of population growth of just 1.4 per cent - the Reserve Bank now </span><a href="https://www.rba.gov.au/publications/smp/2015/aug/html/index" target="_blank" style="line-height: 1.3em;">believes</a><span style="line-height: 1.3em;"> that the </span><strong style="line-height: 1.3em;"><span style="text-decoration: underline;">unemployment rate has likely peaked</span></strong><span style="line-height: 1.3em;"> for this cycle. </span></p>
<div>Previously it had been forecast that the unemployment rate would continue rising to around 6.5 per cent, but now the unemployment rate is seen as more likely to be falling again from 2017. The darker blue shaded areas represent the Reserve's 70 per cent confidence interval.</div>
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<div>However, there are many regions in Australia where unemployment is still elevated or rising, particularly in resources-influenced regions and in South Australia where the trend rate of unemployment has hit 7.9 per cent and rising.</div>
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<div>Thirdly, with the mining investment supernova now set to implode in spectacular style, the strong rates of immigration which benefited the resources areas of regional Western Australia and regional Queensland have now ebbed away.</div>
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<br><img src="https://2.bp.blogspot.com/-UAU8Pw52o-w/VZsC3PaTSPI/AAAAAAAAWtQ/Ip5KWRT_itE/s640/eng2.jpg" width="640" height="274"><br><br>Accordingly <strong><span style="text-decoration: underline;">population growth has become more capital city focused</span></strong>.<br><br>The most recently available data showed that Greater Melbourne and Greater Sydney alone accounted for all but half of Australia's total population growth, while Greater Brisbane and Greater Perth accounted combined for close to nearly a quarter of the total.<br><br>Regional population growth on the other hand has in aggregate been been slow and slowing.<br><br>As for whether the mining boom will have a second wind? Highly unlikely: that's not the way that commodity cycles typically tend to work.<br><br>The Reserve Bank's Commodity Index was once again smoked by another 5 per cent on a monthly average basis in SDR terms in July to be a punishing 20.2 per cent lower over the past year.<br><br>Ouch.<br><br>In Aussie dollar terms the decline has been a somewhat less dramatic 8.5 per cent year-on-year, but nevertheless Australia's terms of trade (TOT) remain well above their long run average (and TOT booms have historically tended to over-shoot on the downside too).</div>
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<div>Note that it's not just iron ore and coal prices which have been hammered as demand from China and elsewhere has slowed in the face of a glut of supply.<br><br>Oil, aluminium, copper and gold have all hit half decade lows in recent times, while the price of silver has tracked little better.</div>
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<br>Slightly bizarrely - given that coal prices are well below the project's notional break even point - the Adani Carmichael Mine is one possible exception to the accelerating decline in mining investment.<br><br>Some folk with the power to exert material influence evidently has the government's ear relating to this essentially unviable mega-project.<br><br>Generally speaking, however, mining production is ramping up, there is heavy downward pressure on commodity prices, and ever fewer material projects have been passing viability.</div>
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<br>Going forward population growth in Australia will follow the employment growth, which has been heavily focused on Sydney and Melbourne, and to a somewhat lesser extent Brisbane and the Gold Coast.</div>
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<br>Indeed, over the past year more than 80 per cent of employment growth has been found in New South Wales and Victoria, and overwhelmingly in Sydney and Melbourne. </div>
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<div>With the Western Australian economy slowing and net interstate migration going into reverse gear, population growth will is likely to be heavily focused on the three largest capital cities - a trend which will only be exacerbated by the nascent explosion in foreign students.<br><br>The Reserve Bank added its own outlook for the housing market in the latest SOMP:<br><br><em>"Supply constraints, particularly in Sydney, may limit the extent to which new dwelling investment can satisfy growing demand, which raises the possibility that housing prices will grow more quickly than forecast. </em><br><em><br></em><em>Also, housing prices outside Sydney and Melbourne are little changed over the past year or so and may not yet have responded fully to the very low levels of interest rates."</em>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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