One Crucial Factor Affecting Property Prices in the Long Term

We explain the Perth and WA real estate markets in minute details here on occasion. Usually, we talk about what is happening now and why it is happening or what we believe will happen in the short term future and why.

Long term prices are another story altogether, though. One of the patterns that is the most obvious to us is that it is almost impossible to not make money if you hold onto a well-maintained property in even a mediocre location for twenty years.

However, the Global Financial Crisis caused a lot of people to rethink their views on everything financial. Even something that has been a “sure thing” for as long as records have been kept undergoes more scrutiny. Here is the biggest factor that we think is going to keep property prices healthy for the next twenty years.

Population Growth

Australia is growing. In 2013, Australia's population increased by almost 400,000 people. While part of this is a combination of people living longer and natural population growth, it is also because Australia is becoming an increasingly popular place to live.

Australia is growing by 1.8% every year. This means that in the next five years, there should be 2.3 million more Australians who will need places to live. On its own, this would represent a lot of growth, but the Australian Bureau of Statistics recently estimated that our population is probably going to double within 60 years.

To put this in perspective, it took more than 200 years to amass 23 million people; it will only take 60 years for the next 23 million.

Gee, That's a Lot of Houses...

A rough but conservative estimate is that Australia is going to need around 8 million homes in the next 60 years. It also means more stores, schools, medical facilities and other infrastructure.

What Does it Mean to You?

The majority of those homes will be built in capital cities, raising their share of the population from 66.1% to 73.4% by the year 2061. Perth is projected to have a population of 5.45 million people by 2061.

Call Investors Edge for more information: 1300 472 427.