Over the last decade Melbourne’s growth outpaced all other Australian capital cites, adding 666,000 new residents or the equivalent of a third of Brisbane’s population. The Age reported the city added 67,000 people in the year to June 30, 2011 – almost 1300 a week – as new suburbs emerged, expanded and filled up, mostly to the north and west.
BY MICHAEL YARDNEY
Melbourne accounted for 80 per cent of Victoria’s growth in 2010-11. While regional cities and the coast grew solidly, population losses continued in inland western Victoria.
The Australian Bureau of Statistics estimates Melbourne had 4,137,432 residents in the middle of 2011 and had grown by almost 20 per cent in 10 years. Most of these new residents set up home on the city’s fringes, as homebuyers moved out in search of affordable housing.
Fact is, for the second year in a row, Wyndham in Melbourne’s west was Australia’s fastest-growing municipality, adding 12,230 people. This is more than Adelaide or the Gold Coast – and almost 10 times as many as the Pilbara.
Before you get too excited, this doesn’t translate to a good area for property investment. Just because there is physical growth in an area and new population growth, it doesn’t mean these are good places to invest. In fact, they generally aren’t.
There’s currently an oversupply of new properties in these suburbs, vacancy rates are high, there isn’t a strong demand from tenants and there is little scarcity in new estates. This means there is often lower capital growth and rental growth. Not a good recipe for investment.
Growth is slowing
Growth in Victoria has slowed sharply since 2009, as the higher dollar and new visa rules have shrunk the number of foreign students coming here. In 2008-09, the city grew by 96,000 people, or 2.5 per cent, compared with 67,000 or 1.6 per cent last year.
The state’s growth has shrunk from 120,000 people, or 1.5 per cent in 2010-11. Even so, it outgrew New South Wales (1.1 per cent to 82,200) and Queensland (1.7 per cent to 74,800).
What about growth in the rest of Australia?
In the past decade, Sydney grew by just 499,073, or 12 per cent. For every three new residents in Sydney, Melbourne gained four. But the gap narrowed last year, and with the economic trends shifting against Melbourne, Sydney could well outgrow it in this financial year.
Perth was the standout of the big cities. It again outgrew Brisbane, adding 42,750 people, up 2.5 per cent, to end the financial year with a population just short of 1.75 million.
The centre of Australia’s economic growth, the Pilbara, grew by just 1,300 people, or 2.7 per cent, despite the billions of dollars of construction work taking place there. It still has only 49,900 people living in an area twice the size of Victoria, as its workers commute from other cities, other states and even other countries.
If you want to invest in mining towns, I suggest you invest in the two biggest mining towns in Australia – Brisbane and Perth.
Michael Yardney is the director of Metropole Property Investment Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Investment Update blog