Geelong and the Gold Coast projected to be big winners of the population reshuffle

Geelong and the Gold Coast are projected to be the big winners as Millenials drive growth.

Planning for future growth of our cities is of utmost importance. We don’t want to find ourselves in a position again like Melbourne or Sydney that allowed population growth to outpace infrastructure growth for a decade. To estimate where to build, infrastructure and housing planners naturally use population projections.

Australia’s detailed Census data provides the foundation for population projections. On a national level it’s pretty easy to predict the future population size in the medium-term. We know roughly how many births and deaths will occur and population growth through migration is managed by the government.

The ABS publishes the gold standard of Australian population forecasts every five years (about two years after the Census). This is easily the most cited set of population projections for Australia. Businesses and governments of all levels heavily rely on this data – whether they know it or not – because that’s what consultants and planners use. These ABS data are only released on a state level. Also, by now the 2018 forecasts are terribly out of date and were done before Covid.

The same is the case for the small area (suburb) level population forecasts that are published by every state and territory around three years after every Census. None of these publicly produced projections takes Covid into account. Since Covid changed settlement patterns across the whole country, pushed the birthrate down even further, and locked out migrants, all of our treasured population forecasts are almost useless now.

Well, there is one set of population projections that comes out every year. These top-level population projections are done for each budget. Here the reigning treasurer has a motivation to exaggerate the migration intake a bit to create a “back in black” success story. We should take these projections with a grain of salt.

While we are waiting for public population projections that take Covid into account we must look at the private sector. The consultancy .id had its demographers and population experts create a small area population forecast.

Looking at their forecasts on a city-level reveals in broad terms who might be the biggest winners of the population reshuffle within Australia.

Let’s only look five years out for now. In the five years leading up to the pandemic Australia grew by 1.8 million people. The forecast for the next five years (2022-27) projects much slower growth at 1.3 million people – that’s about a 30 per cent decline. In interpreting the data that means a town that is growing at around the same pace as before Covid is doing exceptionally well.

The fastest growing town in Australia is said to be Melbourne. The Victorian capital will grow at a much higher rate than Sydney despite having a reputational problem after going through the world’s longest lockdown. Melbourne is adding over 400,000 people until 2027 – that’s about 80,000 per year. While this is much lower growth than leading up to the pandemic (546,000), these are massive growth figures. The initial growth can take place without too much impact on the housing market. International students and skilled knowledge workers will settle in vacant inner-city apartments. The existing stock won’t of course nearly be enough to house 400,000 people and Melbourne needs to add housing stock (apartments, townhouses, houses) now.

An old mantra in town planning is that the size of a city’s population must never be an excuse for traffic jams or other problems. It’s undersized infrastructure investment that is to blame. Before the pandemic Melbourne allowed its population to grow at a much faster rate than it added adequate infrastructure – just ask the residents of Point Cook, Tarneit, or any other growth corridor. The good news is that during the pandemic both the state and federal government were happy to generously budget for infrastructure investments. With record low unemployment rates and low migration intake we risk not having the workers available to build all the wonderful infrastructure that we are happy to pay for.

Sydney is destined to only be the second largest city in Australia. Depending on the boundaries that are used to measure cities, Sydney already has been overtaken by Melbourne. Sydney is transforming itself with lots of growth in the western suburbs where land is being made available and where prices are much cheaper than closer to the water. There is no doubt that Sydney remains the most expensive city to live in which is why growth rates in other towns are said to be higher.

Favourable prices for mining and agriculture products favour Western Australia as a destination and will ultimately translate into population growth. Perth is said to be growing at a much higher rate than before the pandemic (204,000 compared to 119,000).

Arguably the two biggest winners of the pandemic population reshuffle are Geelong and the Gold Coast though. From a demographic data perspective, it’s almost comical how similar the growth profiles of the two cities look.

The two Gs are benefactors of changed housing preferences during Covid.

As every business and even every government department was forced to allow as many workers as possible to work remotely, they created the necessary digital infrastructure. Working from home is now a possibility and for many workers it’s now the preferred way of working. If you don’t need to commute to the CBD in Melbourne or Brisbane every day, the distance that workers are willing to commute increased. Towns in the extreme commutable distance to these CBDs benefited. They offered more affordable housing and arguably better lifestyles to many. This will ultimately put more pressure on traffic infrastructure and governments must act fast to stay ahead of the growth.

Ultimately the growth in Geelong and the Gold Coast will be driven by millennial families. Millennials are the biggest procrastinators that ever walked the Australian continent. They popularised the gap year, stayed at uni for just one more degree, started work later in life, delayed marriage, and have kids about a decade later than their parents did. That said, millennials are doing all the boring, normal things in just the same way as previous generations (just a little later in life). Millennials couples living in the hip inner suburbs of Melbourne and Brisbane are now reaching the family formation stage of the life cycle and need to leave their one and two-bedroom dwellings behind. Their quest for affordable, family-sized homes (plus they probably want a zoom room – a little study with a door to keep the kids and the cats out of business calls – too) brings millennials to Geelong and the Gold Coast.

These growth patterns across Australia are predictable now and we mustn’t act like we didn’t know what was coming. Now is the time to prepare our fast-growing towns for the future onslaught of population. Land needs to be made available, infrastructure needs to be built (this will almost certainly require the import of workers), and populations need to be primed to what’s coming. The opportunities are aplenty, but the growth will need to be carefully managed.

Simon Kuestenmacher is the Co-Founder of The Demographics Group based in Melbourne