Australia requires 172,000 new homes per year until 2036

Today more and more people across Australia and right around the world live and work in cities. Cities offer better prospects not only for jobs, but transport, healthcare and education. Major cities also tend to see the greatest demand for real estate with household net worth generally experiencing greater gains than more regional areas.

According to recent research by Mirvac and stats from the ABS, Regional Population Growth, 2014-15, most of the population in Australia live and work in cities, with over 75% of the population living in the 20 largest cities in Australia, whilst 60% live in the top four largest cities – Sydney, Melbourne, Brisbane and Perth.

However, by 2031, it is estimated that over 30 million people will live in Australia, up from today’s estimated 24 million. This means that within the next 15 years, an extra 5.9 million people will need to be accommodated within these top four cities.

So how will this affect these top four cities and Australia as a whole?

With the population set to rise, a serious number of new household dwellings need to be built to cater for this increased population. It is projected that Australia will need an average of 172,000 new households every year until 2036. The top four cities will also be home to even more people by 2036 with its share of Australian dwellings increasing from 65% to 74%.

For metropolitan Sydney and Melbourne, new Australian dwellings will increase from almost one in three in 2012 to nearly one in two by 2036.

However, with space becoming limited especially within Sydney, we are starting to move away from the Great Australian Dream of owning a house with a large backyard, to purchasing an apartment with the convenience of being on the doorstep of transport and within easy commutable distance to work. Less available land means we need to build upwards, whilst also look at areas further out of our major cities. Moving further out of our cities means improved infrastructure is required to facilitate this and allow people to live further out.

These top four cities, especially Sydney and Melbourne also contribute to Australia’s GDP growth through their strong economies. According to SGS Economics & Planning (‘SGS’), the top four cities contributed to 60% of Australia’s GDP growth in FY15, with Sydney and Melbourne accounting for more than 50% of the national GDP. Sydney alone actually accounts for 30% of the nation’s economic output.

Outside of these major cities, Regional Western Australia accounted for 24% of economic growth, however it faces more volatility due to being reliant on exports and the mining industries and does not make a great place for investors to invest in property.

Today both Sydney and Melbourne are seen as global cities and there is a greater connection between these cities and the global economy than other Australian cities.


Australia’s major cities like Sydney and Melbourne are now home to highly knowledge-intensive firms with highly skilled workers. However, the most important industry within Sydney is the financial services sector which contributed to over 16% of Sydney’s output in FY15. Information & Communication Technology (ICT) and digital services, tertiary, education and creative and professional services also plays an important part.


Melbourne has also seen major growth in the professional and financial services and represents 22% of Melbourne’s economy according to SGS and has moved away from manufacturing. There is a significant concentration of diversified firms within the CBD as well as in neighbouring suburbs including Docklands and Southbank.

Melbourne is also an international destination for university students and is highly regarded as Australia’s sporting and cultural capital.

Urban Population Growth

Australia’s population is still the fastest in the OECD after Israel and Luxembourg, and is also much faster than Canada, United States as well as the UK. New South Wales has seen significant growth over the past five years from net gains of 74,000 per year in 2011 to 104,000 in FY15. Sydney is mainly responsible for this rising population with net additions of 53,000 back in FY11 to 83,000 in FY15.

Although Sydney might be Australia’s most populated city, Melbourne remains Australia’s fastest growing city with an average of 92,000 additional residents every year for the past three financial years. Most of these new residents are residing within the Inner City Melbourne suburbs, with an additional 5,000 people moving here every week. Melbourne City on average gains 130 extra people every week. This might be helped by the fact that Melbourne has been named the most liveable city in the world for the fifth year running by the Economist Intelligence Unit (EIU) Survey.

With such large population increases expected over the next 20 years, and greater focus on the financial services sector and knowledge-intensive companies, these employment sectors are expected to achieve record strong net gains and create 189,000 additional jobs over the next five years, helping to further strengthen Australia’s economy and global presence.

Health care and social assistance is also expected to experience strong net job gains of 250,000 over the next five years.

With such a large rise in population numbers, investors should not worry about investing in the top four cities including Sydney and Melbourne. There might be an oversupply of property in some areas of Melbourne at the moment for example; however, this will soon subside and vacancy rates will soon decline, with these cities experiencing stronger business conditions and employment markets. People are attracted to these major capital cities due to the opportunities that they offer as well as being consistently supported by major public investment and extension of the public transport network.

172,000 new homes are required every year until 2036 within Australia so holding onto property for the long term will see greater capital gains as people opt for the convenience of inner city living and prefer the close proximity to jobs, transport and important amenities.

To find out more about how the population increase will affect property, and which suburbs are great buys right now, feel free to contact the iBuyNew team today to speak to one of our expert Property Consultants who are across the Sydney, Melbourne and Brisbane markets. Call us on 1300 123 463.
Published on 9th of May 2016 by Marty Stanowich
Marty Stanowich
Marty Stanowich


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