Population Growth, Dwelling Commencements & Property Prices

Some interesting pieces of information have recently become available.
The first is that Australia's population is increasing at record levels, both from migration and natural increase-see graph below.
 
By region, about 80% of growth is in the eastern seaboard states-see chart below.

People have to live somewhere.
We would expect record levels of population growth to require record levels of new dwelling commencements.
But the following chart from the RBA shows that in fact dwelling commencements are low.

The following three charts from the ABS show that the low growth is primarily stemming from NSW.
NSW dwelling commencements

Victorian dwelling commencements

Queensland dwelling commencements

This combination of record population growth, and low dwelling commencements, will inevitably lead to rises in dwelling prices.
BIS Shrapnel has recently sought to quantify the expected capital gains in residential homes from June 2008 to June 2011.
While the reality will doubtless be capital gains that are higher or lower than forecast, the ranking of the various regions are in line with what would be expected from the gap between dwelling commencements and population growth.
Of the larger capitals, Sydney tops the list with expected capital growth of 18%.
Melbourne, Brisbane, Adelaide, Canberra and Hobart range from 14-16%.
Perth is lower at single figures, after its recent skyrocketing prices.
Darwin is strongest at 21%, but we urge caution as this is a relatively small market.
The strongest growth is predicted for Gold Coast and Sunshine Coast regions of Queensland (22%), reflecting the enormous population growth of this area and the associated infrastructure development.
This region has been and can be an excellent area for investors, although caution needs to be excercised as there are horror stories about unscrupulous developers and marketers causing investors to overpay.
We have sourced some excellent properties in the regions identified as providing best prospects for capital growth, and with gross yield around 5%.
In Sydney's highly-desirable northern beaches we have brand new, and off-the-plan, units from $385k (one bed) and $499k (2 bed) all with parking.
In Sydney's exclusive lower north shore (Crows Nest) we have two sets of superb-quality off -the-plan apartments:
1. Due for completion in Q3 2008, 1 bed from $385k, and 2 bed with parking from $590k
2. Due for completion in Q1 or Q2 2009, very large apartments, all with parking, from $480k (1 bed) and $650k (2 bed).
For those looking outside Sydney, we have also available in south east Queensland excellent house & land packages, close to the coast and transport, with rental yield of around 5% gross or higher.