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October 26, 2021

How Does Population Affect The Property Market?

Closing our international borders to keep COVID out has had a dramatic effect on our national population.

What impact has it had on our property market?

What impact does population growth have on house prices?

As the population grows, more people need a place to live. This means that over the long term, population growth drives increased demand for housing, and therefore a strong property market.

Population growth also affects the property market by impacting the economy. To keep growing, the economy needs a continuous supply of workers. The workforce grows when the population does, so population growth spells good news for the economy because it means more workers. And because housing prices tend to follow the economy’s cycles, it’s also good news for the property market.

Australian population growth update

Before COVID, two-thirds of Australian population growth came from immigration, with the rest from natural increase. That meant that when our international borders closed due to COVID in March 2020, our population growth slowed to almost zero. According to the ABS, in the year to March 2021, Australia’s population grew by just over 0.1 per cent. This small amount of growth (35,700 people) came wholly from a natural increase. Overseas net migration was negative for the first time since 1946.

How is population growth affecting the Australian property market?

The overnight loss of international arrivals impacted the economy and certain real estate markets across Australia. Without international students and newly arrived migrants, low-cost, investor-targeted housing, especially in Sydney and Melbourne, shed value.

Once international borders reopen, population growth is expected to recover. The government’s Centre of Population is forecasting positive migration in the 2022-23 financial year.

The great interstate migration trend

But international migration is only part of the story. In the wake of the pandemic, interstate migration trends have been making headlines here in Australia.

The ABS reports that in the March 2021 quarter, 104,100 people moved interstate, 16,400 more than during the March 2020 quarter and the highest for a March quarter since 1996.

Queensland was the preferred destination, gaining 7,000 new people, more than any other state or territory. And it wasn’t a one-off – in the December 2020 quarter, Queensland welcomed 9,800 people from elsewhere in the country. Most of them came from New South Wales and Victoria, the two states hit hardest by the pandemic.

Regional renaissance

With capital cities recording a net loss of 11,800 people in the March 2021 quarter, the largest recorded quarterly net loss attributed to internal migration, it’s regional areas that are welcoming new residents.

This wave of pandemic tree changers has resulted in a regional property boom across the country. Here in Queensland, regional property prices soared by 17.1 per cent compared to Brisbane’s growth of 13.2 per cent.

How the population is affecting the Toowoomba property market

Increasingly out-of-reach property prices are one of the factors contributing to the mass exodus from the capital cities. With its affordable real estate, job opportunities and proximity to Brisbane and transport links, Toowoomba has proven a popular destination for those escaping the big smoke, especially first home buyers.

According to research from mortgage broker platform Hashching, one-fifth of Queensland’s first home buyer transactions are here in Toowoomba. Nearby St Aubyn is also popular.

The Real Estate Institute of Australia (REIA) reports that Toowoomba first home buyers have been taking advantage of government stimulus like the First Home Loan Deposit Scheme (FHLDS) and the New Home Guarantee (NHG), with almost 100 buyers purchasing their first home here using the schemes. The HomeBuilder grant scheme saw demand for vacant land in Toowoomba spike too.

What’s next for the Toowoomba real estate market?

The widespread adoption of remote working is allowing more and more people to move further afield in the pursuit of a better lifestyle and more bang for their real estate buck. The laidback Queensland way of life is expected to draw even more new residents from other Australian states and territories over the next twelve months.

With property prices in the capital cities showing no signs of falling any time soon, regional Queensland real estate represents real value. And with the Toowoomba market tipped to rise rapidly in the lead up to the 2032 Commonwealth Games, we can expect to see savvy homebuyers and investors snapping up local property sooner rather than later.

Now is the perfect time to buy in Toowoomba

Whether you’re looking for your first home, want to make a tree change or are searching for the perfect investment property, we can help. Get in touch with our expert local team today.

Article by Trevor Manteufel

With 19 years experience in selling real estate in Toowoomba & surrounding areas, Trevor is relaxed, approachable & confident, whilst providing you a high level of service, listens to your needs and makes selling your home a positive, and … View profile

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