In the 2014 and 2015 calendar years, a remarkable 194,000 extra jobs were created in Greater-Melbourne. No wonder its property market has been strong.
The city of Melbourne celebrated its 180th birthday in 2015 with its third consecutive good growth year, and 2016 looks like being another solid year for Melbourne’s property market. Its economy over the last few years has been quite robust and the primary influencer of its property market.
Victoria’s increased housing demand has been driven by consistent job growth since 2010. Melbourne’s employment opportunities have coincided with a down turn in Western Australia’s (iron ore) economy, resulting in a rebound in interstate migration since 2012.
Victoria’s population growth rate has been consistently around 1.7% per annum for several years. The most current population data for Greater-Melbourne shows population growing by approximately 182,538 people over the last two years. Housing demand is therefore on par with historical averages. Based on Census data (2.6 people per household) the underlining demand for additional housing over the last two years is 70,207. The local government authorities (LGAs) with the biggest recent population increase are Wyndham (5.6%), Melbourne City (5.0%), Whittlesea (4.4%), Melton (4.0%), Cardinia (3.6%), Yarra (3.6%), Casey (3.1%), and Hume (3.1%).
Victoria’s economy at the moment is strong as evidenced by its AAA credit rating. The biggest industry employers in Greater-Melbourne are Health (11.6%), Manufacturing (11.4%), Retail (11.1%), Professional Services (9.6%), Education (8.5%), and Construction (6.3%).
In the 2014 and 2015 calendar years, a remarkable 194,000 extra jobs were created in Greater-Melbourne. No wonder its property market has been strong. Much of this job creation can be attributed to really strong tourism, professional services such as finance and insurance, education, and construction industries. Retail (192,211) and Accommodation and Food Services (104,223) are big employers. With Tourism Australia recently reporting an increase of 13.6% in international visitor numbers in Victoria during 2015 there is every reason to expect the retail and accommodation sectors to remain strong.
One can’t under-estimate the contribution which the international student market provides Melbourne. The education sector as a whole employs 148,345 people. Thirty-four per cent (34%) of Australia’s enrolments of international students in 2013 were in Victoria (see Melbourne). This equates to an extra 112,944 students who each spend (say) $50,000 per year on local goods and services, not to mention their visiting family and friends.
While the construction industry is a big employer, the legacy of many of these new jobs over the last few years is a pipeline of housing supply which Propertyology’s research suggests is significantly more than demand requires. Frankly, there must be question marks surrounding the sustainability of thousands of Melbourne construction industry jobs.
This article was written by Simon Pressley of Propertyology, an REIA Hall Of Fame Inductee, property market analyst, accredited property investment adviser and Buyer’s Agent.
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