Australia’s rate of population growth slowed in 2014, according to the latest official demographic statistics released recently. The same period also saw the nation build more new homes than in any other year on record. This dynamic has generated some interest with releases from the Housing Industry Association (HIA), the ABS, and CoreLogic RP Data.
The ABS figures show Australia’s population reached 23.63 million at the end of 2014 – an increase of around 330,000 people over the year, amounting to 1.4 per cent growth. After reaching a peak rate of 1.8 per cent in 2012 (when the population increased by 400,500 people), the pace of population growth subsequently slowed throughout 2013 and 2014. The deceleration in growth has been a focal point of commentary following the ABS population release and the latest HIA Economics Research Note analyses the internal migration and population dynamics currently at play.
Variations in population growth in states and territories indicate divergent experiences with regard to overseas migration and interstate migration flows.
Population growth in New South Wales and Victoria was particularly strongly during 2014 while Western Australia and Queensland, which are in the midst of a post-mining boom economic adjustment, witnessed the growth rate slow. The post mining boom adjustment impacted Northern Territory in the form of an exodus.
Demographic development in South Australia and Tasmania reflects their status as the nation’s two most underperforming state economies. These states experienced significant population losses as a relatively large number of residents moved interstate. SA and Tasmania also experienced a lower net contribution to their respective populations from overseas migration. Similarly, the Australian Capital Territory recorded relatively significant losses through interstate migration, although this was partially offset by a slight lift in net overseas migration.
In terms of population growth driving strong housing demand in the current cycle, the two states of most prominence are NSW and Victoria.
The population of NSW increased by 1.4 per cent (103,011 people) in 2014. Though lower than the previous year, it is still a relatively strong rate of growth for the state when compared to a 25-year average of around 1.1 per cent per annum. The two key drivers of the strong performance include a significant improvement in the balance of interstate migration and an increase in net overseas migration.
The population of Victoria increased by 1.8 per cent (101,521 people) in 2014, making it the fastest growing state in the country last year. While this pace was slightly slower than in the previous year, it is still a strong rate of growth for the state when compared to a 25-year average of around 1.2 per cent per annum. The lion’s share of the latest growth came from net overseas migration with the balance of interstate migration topping the performance.
Despite the deceleration in the national rate of population growth, the current population growth dynamics in Australia’s two largest states remain supportive of the strong demand for additional housing evident in the market at present.