DEMOGRAPHICS – The socioeconomic characteristics of a population expressed statistically, such as age groups, gender, ethnicity, geographic regions, income brackets, average household size, unemployment, occupations, birth rates, net migration etc etc
A national Census of the population is conducted every 5 years and collects information about a wide range of topics.
“The Census of Population and Housing (Census) is Australia’s largest statistical collection undertaken by the Australian Bureau of Statistics (ABS). For more than 100 years, the Census has provided a snapshot of Australia, showing how our nation has changed over time, allowing us to plan for the future.
The aim of the Census is to accurately collect data on the key characteristics of people in Australia on Census night and the dwellings in which they live. In 2016, the Census will count close to 10 million dwellings and approximately 24 million people, the largest number counted to date.
The information you provide in the Census helps estimate Australia’s population, which is used to distribute government funds and plan services for your community – housing, transport, education, industry, hospitals and the environment. Census data is also used by individuals and organisations in the public and private sectors to make informed decisions on policy and planning issues that impact the lives of all Australians.”
The demographic factors to consider when making a property investment decision include:
1.Population growth – both national and local. Shelter is a basic need and so as the population grows so too does the demand for housing. With increases in population, the demand curve for housing shifts out to the right and ‘ceterus paribus’ (all other things being equal such as supply remaining constant), prices will rise to ration the available options. Australia’s population is rising rapidly, hitting forecast milestones ahead of time. This is a result of both natural increases (births – deaths) and net migration.
RMIT ABC Fact Check
We have seen that the property market is a misnomer. Demand and supply varies from state to state and town to town and between varying types of properties.
We have all seen the stories about towns “dying” due to the construction of a new freeway bypassing the local area, or a change in export demand for raw materials or even government policies that condemn inefficient manufacturing to become a ‘sunset industry’. Allocative efficiency assumes that resources (including labour) will be redeployed to new ‘sunrise industries’. Labour is not however perfectly mobile nor are resources and so if the jobs ebb away, people do too. The population existing and projected for Local Government Areas is an important demographic that needs to be examined.Buying in an area that has a population of at least 100,000 within a 10 km radius is an important benchmark. These people constitute the tenant pool and the market on re sale.
2. Household composition – there are 10 million households in Australia and their makeup varies – couples, couples with children,singles,’empty nesters’, extended families, and a number of other variations. The average number of people per household and the relationships of those cohabiting will influence the demand for housing and the type of housing. .For example, the increasing divorce rate means that in most cases, two houses are required in place of the marital home. This may lead to an increased demand for smaller, higher density living to accommodate smaller budgets. A rising number of household with ‘grey hairs’ may mean a rising demand for low maintenance apartments and townhouses.
A family oriented demographic tends to provide a pool of stable tenants. Once children are established in schools and sporting activities and neighbourhood friendships, the desire for permanence increases, reducing tenant turnover and the costs associated with vacancy periods and lease renewals.
3. Average age- the dominant age group in an area is a significant factor. If an area is dominated by millenials (those born in 80’s and 90’s) we are told they are unlikely to move to outer metro areas on large lots of land with grass to mow! Their preference is for more urban, medium density locales. The other side of the coin is that in an area with a large young family presence it wouldn’t make a lot of sense necessarily to invest in an apartment. Though, there are always exceptions to the rule. Many families are sacrificing space to be within preferred school catchment areas and so demographics need to be co-examined with other “things that count”.
4. Incomes – As incomes rise people are prepared to pay more for housing both as tenants and as owner occupiers. Above average and rising incomes is what allows prices to rise. However, it’s important to remember the key appeal factor of affordability. Many lower socio-economic, lower income demographics make solid, reliable tenants and the lower price bracket maximizes the market on exit.
5.Unemployment – to be able to pay rent consistently generally people need to be employed. Higher average unemployment rates are typically to be avoided, but once again, proper analysis will consider the employment hubs in the area and the property’s proximity to those. It may be a matter of being more selective when it comes to tenant income and employment checks – and industry concentration. Some professions are recession and unemployment proof such as those in health and education. Proximity to a brand new expanded hospital in a suburb with a large and growing (even ageing) population may make a good choice.
6. Tenure – there are two ways of looking at this metric. A high proportion of renters may indicate that an investment property is appropriate because it seems to be in demand. It may be because the population is somewhat transitory as in the case of students (but there is an endless supply of them) or because it is a boutique area that has a very high ownership entry point. Alternatively, a much higher owner occupier rate may pose an opportunity to provide a solution that is lacking in the area and be in demand also. in other words, fill a gap in the market.
7. Occupations – Being aware of the major occupational categories in an area will also be a guide as to the type of property that will have market appeal. For example, if predominately ‘Trades & Technicians’ , then garaging and storage is probably going to be important. This data also is an indication of the preference for and ability to afford higher quality housing and therefore the need to meet higher expectations in terms of amenities, design and inclusions.