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Australia’s Population Boom: Challenges and Opportunities

Australia is experiencing rapid population growth, and the latest data indicates that the record population increase observed in 2022 has continued into 2023. This surge in population is primarily driven by a notable increase in net migration following the pandemic-related border closures.

The influx of people, particularly students, into Australia is defying the usual trend of students departing after completing their terms. This demographic shift highlights the pressing need for more housing to accommodate the growing population and enhanced infrastructure to ensure a high quality of life in our cities.

According to a recent report from PropTrack, the population grew by 2.02% in the 2022 calendar year, with the majority of this growth attributed to record net migration, surpassing 400,000 individuals. PropTrack noted that prior to the pandemic, annual population growth through net migration averaged around 220,000 persons. However, during the pandemic years of 2020 and 2021, this number was significantly lower, with an increase of less than 2,000 persons.

In 2023, population growth has accelerated further. The Australian Bureau of Statistics (ABS) reported a growth rate of 2.2% in the 12 months leading up to March 2023, with a record-breaking quarterly growth of 0.7%. This surge was primarily driven by net overseas migration, accounting for 454,400 people, alongside a natural increase of 108,800 individuals during the same period.

This population growth is not uniform across all states and territories. Western Australia leads the way with a growth rate of 2.8% in the 12 months to March 2023, while Victoria has reversed Covid-induced declines and recorded the largest numeric increase of 161,700 people. Meanwhile, Queensland’s strong growth, attributed to interstate migration, has begun to ease slightly.

New South Wales attracts the largest number of people from overseas but continues to lose the most migrants to other states. The current trends suggest that population growth is not only continuing but accelerating.

The data also reveals that our working-age population is growing at a record rate, reaching 2.8% in the year leading up to August 2023. These numbers underscore that our population is growing faster than usual, presenting both challenges and opportunities.

The Intergenerational Report forecasts that over the next 40 years, Australia’s population will grow by an average of 1.1% annually, slower than the 1.4% growth observed over the past four decades. This projection is considerably less than the current and rising 2.2% growth rate. While the rapid growth has helped mitigate economic slowdown, skilled migrants have filled workforce gaps, and it’s expected that growth will ease in 2024 and 2025.

The surge in population growth has created a housing supply and demand mismatch, resulting in a housing crisis. Challenges include higher financing and materials costs, labor shortages, and a gap between approved projects and completed developments. The solutions to this housing crisis are multi-pronged and encompass better planning, infrastructure development, innovative use of existing housing resources, and less demonising and disadvantaging mum and dad property investors who supply the bulk of Australia’s rental properties. 

Looking ahead, it’s evident that demand will outstrip supply for some time as immigration levels remain high while property construction struggles to keep pace. As a result, property values are expected to continue increasing, emphasizing the need for creative solutions to meet the evolving housing demands of a growing nation.

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