mrd

March 18, 2009

Australia experiences high population growth: Australian Bureau of Statistics (ABS)

Australia is continuing to record high population growth, according to figures released today by the ABS.

A total population growth rate of 1.8% was recorded for the year ending September 2008, up from the 1.2% recorded five years ago. The last time Australia experienced higher growth rates was in the 50′s and 60′s (above 2%) as a result of post war migration and high birth rates.

As at 30 September 2008, Australia’s population had grown to 21,542,000 an increase of 389,000 people over the previous year. Australia’s net overseas migration contributed to more than half of this growth at 61% or 235,900 people. Natural increase (the excess of births over deaths) contributed 153,400 (39%).

In the same period, Western Australia continues to record the fastest population growth at 2.9%, followed by Queensland (2.5%), the Northern Territory (2.2%), Victoria (1.8%), the Australian Capital Territory (1.4%), New South Wales (1.3%), South Australia (1.1%) and Tasmania (0.9%).

Queensland and Western Australia received the most people from net interstate migration, gaining 22,700 and 5,600 people respectively from the other states and territories. The states that lost the most people to interstate migration include New South Wales (down 22,400), South Australia (down 4,700) and Victoria (down 2,400).

Over the past 8 years or so speaking with all types of people on the subject of investing in property, many, generally new to investing, ask me the “what if” questions. My broad base of experience has meant my answers have generally put their minds at ease. Two questions, however, that I lacked a good solid answer for were:

1. How good will your portfolio be if we have another world war?
2. How good will your portfolio be if we have a worldwide recession or depression?

Well, with regards to Q 1, I still have no concrete answer for, and hopefully never will. With respect to Q 2, however, I can now (i.e. only now) say from experience… “It’s all ok”!

More…

The Reserve Bank of Australia (RBA) will meet for the first time this year, next Tuesday. While it’s difficult to know exactly what they will do with official interest rates, I expect another generous reduction to be handed out; probably 1%; but certainly at least 0.75%.

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This afternoon Glenn Stevens, Governor of the Reserve Bank of Australia announced a reduction in the official cash rate by 100 basis points. In layman’s terms that means a 1.0% reduction… bringing the cash rate to just 4.25%.

Commonwealth, Westpac and NAB moved quickly and cut their variable home loan rates within a few minutes of the Reserve Bank’s announcement; Commonwealth and NAB by a full 1.0% and Westpac by 0.8%. Other lenders will soon follow making official announcements.

Using the Commonwealth Bank as a typical example, the rate for a full document standard variable loan will now come down to 6.74% with the discounted rate (Professional Package) being 6.04%

Back in August, just four months ago, the Commonwealth Bank’s full document standard variable loan was 9.58%. Someone with a $350,000 mortgage has seen their monthly interest commitment drop by $828.33 over this time… with more to follow in the New Year!!!

• To read today’s statement from Glenn Stevens; RBA Governor – click here
• To read my interest rate cut prediction of last Friday- click here
• To read about “What In The World Is Going On With Property” Web Seminar (our very last for 2008) – click here
• To register for our “What In The World Is Going On With Property” Web Seminar (our very last for 2008) – click here
• To read testimonials of other web seminar attendees – click here

Happy Investing,

Nick Lockhart
mrd customer care program… because investing is personal

To make sense of the property market we must separate opinion from fact. Opinions will always be heard… just in greater numbers now perhaps. If you are prepared to “drill deeper” and dissect the evidence available; the facts will speak for themselves. There’s no reason for allowing the conflicting voices of opinion to keep you confused!

In the current round of Web Seminars we are offering, I highlight four key factors that are a MUST… if you expect to draw any credible conclusions.

1.    Record Population Growth
2.    Investors Have Fled The Market
3.    Home Ownership Unattractive
4.    New Construction Has Stalled Badly

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Last month I felt there was a very strong case for the Reserve Bank of Australia (RBA) to cut the official interest rates by a full 1%. I kept my considered views to myself but wished I hadn’t afterwards (as you do).

This month I considered the arguments and reasoning put forward by economists, journalists and commentators; who mostly said that rates were likely to drop by 0.5% (although some argued a case for just 0.24% and others no rate cut). I concluded that the likely rate cut would be 0.75% (or possibly more)…

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Last month there was talk that the RBA would drop official interest rates by 50 basis points or 0.5%. I believed there was justification for them dropping rates by a full 100 basis points; or 1%. I kept my opinion to myself and as history has shown, they did…

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For some time now people have been cautious about taking on financial commitments.  The media’s unrelenting broadcast of doom and gloom from America and local interest rates being in the up cycle have made people think twice about what they do with their money.

It is not the lack of money but the fact that money stops moving that causes financial woes.  When people are reluctant to spend, fewer houses are built, there is less demand on goods and services generally resulting in the creation of fewer jobs.  Less jobs means less people able to afford goods and services… and the effect is perpetuated.  The downward spiral, fueled (in part) by negative media, is accelerated by “herd mentality”.

To turn a herd you need to use a momentous event.  In my opinion that momentous event happened today. At its meeting today, the Board of the Reserve Bank decided to lower the cash rate by 100 basis points to 6.0 per cent, effective 8 October 2008.

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Figures released by the Residential Tenancies Authority show the median rent for a two bedroom unit in Queensland had increased by 10% in the past 12 months while the cost of a three-bedroom house rose 11.1%, Housing Minister Robert Schwarten said today.
“In the December quarter of 2006, the median rent on a two-bedroom unit in Queensland was $250 per week, for the December quarter 2007 it was $275,” Mr Schwarten said. “The median rent for a three-bedroom unit in December quarter 2007 was $300 per week, in the same period in 2006 it was $270.” Mr Schwarten said that over five years the median rent for a two-bedroom unit had skyrocketed 66.7% while the cost of renting a three-bedroom house had leapt by 53.8%.
Source: Qld Gov Media release online

Having heard him speak before I have always had a liking for his down to earth logic.

The following are recent comments from this respected analyst.

Queensland:

• population growth = 82,400 pa or 1,600 per week,
• full-time job creation = 100,000 or 35% of Australia’s total
• 38,000 new dwellings starts last year, new market undersupplied by 10%, up to 15% undersupply by years end
• vacancy rate under 2%, and falling
• residential prices currently rising 7% to 10% pa
• long-term rents rising by 10% to 12% pa

Within 25 years the Gold Coast is expected to have:

• more than double the no. of dwellings than today
• 90% more people (800,000+ permanent residents)
• 94% of the dwellings occupied full-time (91% today)
• 2.11 avg household size
• 46% detached compared with 54% today