Australian Property News

Migration influences housing demand shift

Posted on Tuesday, February 08 2011 at 11:45 AM

The migrant shift is signalling a change in housing demand, indicating that housing undersupply is not as serious as many have predicted, according to The Matusik Snapshot.

Australia's population growth has slumped by close to 100,000 over the past 12 months, "yet it's still increasing at a pretty impressive clip at 337,000 new people per annum," says report author Michael Matusik.

He says today, migrants from China, India, Africa and the Middle East equal those coming from Australia's more traditional sources such as the United Kingdom, Europe and New Zealand.

"These new migrants often live in bigger family groups than older Australian households, which in turn is pushing up the average household size and reducing the need to build as many new homes," he says.

Many economists suggest that single brick veneer homes in suburbia will see less demand as a result of the migrant shift, says Matusik.

"This new migrant mix, we believe, has caused a paradigm shift in underlying housing demand. Past trends would suggest that for each new person in Australia, we needed to build about 70 per cent of a new dwelling," he says.

"The current need is to build around half a new home (45 per cent) for each new person in Australia. This suggests that the new Australian housing market, whilst undersupplied, and at about 10 per cent based on our calculations, is nowhere near as short-changed as most of the industry bodies would have us believe."

"There's a serious undersupply of new affordable property priced for the bottom half of the market, but overall the supply shortage is not acute, and most likely will correct itself during the course of the next cycle."

On a state level, the consistent decline in net interstate migration to Queensland needs to be turned around to see housing starts return with gusto, says Matusik.

Lack of housing affordability, lack of culture and insufficient development are the three reasons why younger people tend to find Queensland not so appealing anymore, he says.

"Our over-regulation across too many fronts is also seen as restrictive, and whilst not perfect elsewhere, many who have recently moved from Queensland interstate cite that living in the 'nanny state' had become unbearable. Also, our image of sun and surf doesn't resonate as much as it used too. Authentic multicultural experiences are in higher demand," Matusik says.