23 Mar 2017
Queensland is on the verge of a migration boost from New South Wales and Victoria, which could ease concerns about the state’s elevated housing supply pipeline.
An improved economic outlook and the rising cost of housing in Sydney and Melbourne could lead to an additional 20,000 to 25,000 new Queensland residents a year, compared with 10,000 currently.
House price differentials between the east coast capitals have reached the point which have historically triggered multi-year migrations from New South Wales and Victoria to Queensland.
An improved economic outlook and the rising cost of housing in Sydney and Melbourne could lead to an additional 20,000 to 25,000 new Queensland residents a year, compared with 10,000 currently."
A median Sydney house could currently purchase 2.2 homes in Brisbane, while a median Melbourne property could purchase 1.5 Brisbane properties.
This, combined with a more optimistic economic outlook in Queensland and an uptick in the labour market, make the state a more attractive option for relocation.
The downswing in mining construction that has impacted Queensland’s economy in recent years is reaching its end and the output from these projects, particularly in liquefied natural gas, is starting to deliver royalties to the state, prompting an easing in government fiscal austerity.
In addition, a lift in commodity prices has prompted an upward revision in expected royalty earnings which could enable the Queensland government to embark on large infrastructure projects, such as the Cross River Rail in Brisbane, creating increased demand for new workers in Queensland.
There are already signs of improvements in Queensland’s labour market with an increase in new job advertisements since the middle of 2016.
An influx of new residents enticed by these prospects could be enough to lift Queensland’s population growth back to its long run average of 1.9 per cent, which is slightly higher than the national average of 1.5 per cent.
Significantly, it could also shift the dynamics of the state’s residential housing market, which has been dogged by concerns of over-supply due to lower than average population growth.
Queensland currently has 68,000 dwellings under construction and annual dwelling completions rose to 42,000 in the third quarter of 2016.
At an average of 2.5 people per household, 20,000 to 25,000 new migrants would create demand for 8,000 to 10,000 properties – enough to realign Queensland’s dwelling supply and demand balance and alleviate excess supply concerns.
Historically, periods of interstate migration from New South Wales and Victoria into other states have also been associated with some stabilisation of house prices in Sydney and Melbourne.
This means that the expected shift in residents has the potential to benefit the populations of New South Wales, Victoria and Queensland and bring some easing of pressure in the housing markets in each of those states.
For a full copy of the report “Aussie Macro Outlook, Northern Exposure” please contact your Macquarie representative