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There are two ways of looking at growth towns. On the one
hand such towns are in hot demand. Strong population
growth means there’s a steady stream of people coming
to the town looking for housing either to buy or rent. In this
scenario investing in a growth town seems like a good idea.
On the other hand, however, towns that are growing strongly
are apt to have large tracts of developable residential land.
There’s no scarcity of supply so there’s not the price tension
that’s needed to deliver capital growth. However, are there parts
of growth towns that are unique?
I think there’s merit in both arguments and it really comes
down to your assessment of potential properties in growth areas.
Once a year the Australian Bureau of Statistics (ABS) publishes
estimates of the resident population in 110 towns that comprise
more than 80 per cent of the Australian population. Where are
Australia’s growth towns and what’s driving their growth? And,
more importantly, are these places you might like to consider
owning an investment property?
The 110 towns for which the ABS produces annual population
estimates range from Sydney and Melbourne with more than
four million residents down to towns with little more than 10,000
residents: places like Parkes, Colac and Lithgow. This means
there are around 1600 towns and villages in Australia with
between 200 and 10,000 residents.
The fastest growing town in Australia (with a population base
of greater than 10,000) over the 12 months to June 2013 was the
commuter town of Ellenbrook in the Swan Valley, 30 kilometres
northeast of the Perth CBD. Ellenbrook is a planned residential
community with 36,000 residents in mid-2013, up 9.1 per cent
over the previous 12 months. Ellenbrook is a suburb of Perth –
it’s just that it isn’t contiguous to metropolitan Perth.
Considering that the next fastest growing town, Karratha,
increased by 5.6 per cent over this period, the pace of
development in Ellenbrook must be blistering. And it has a
sizeable population base. It’s about the same size as Geraldton,
which increased by 2.9 per cent over the same period.
Ellenbrook might have lots of houses coming online every year
but it must also serve as a fruitful source of jobs and labour for
the building trades.
Other top performers in terms of population growth over the
past 12 months include Melton, up 5.1 per cent (commuter town
to Melbourne); Busselton up 4.1 per cent (sea change town);
Gladstone-Tannum Sands up four per cent (resources town); and
Bunbury up 3.1 per cent (resources and sea change town).
Towns that didn’t record any population growth over the same
period have a different story to tell. Burnie-Wynyard, Broken Hill
and Whyalla all lost less than one per cent of the local population
in this year.
There simply isn’t the job depth in Tasmania, let alone in
Burnie-Wynyard so locals leave town. In Broken Hill, the silver
ore that created the town in the late 19th Century is all but
depleted. And the steel-making business of Whyalla is shedding
labour. In the Latrobe Valley, labour shedding in the power
industry resulted in no net population growth in Traralgon-
Morwell in this year.
Growth towns in Australia follow four themes. There are
resource towns like Gladstone and Bunbury but also Cessnock,
Mackay, Kalgoorlie and Rockhampton. Then there are lifestyle
towns offering jobs in a nearby major city. These include places
like Ellenbrook, Melton, Warragul-Drouin and also Highfields
Of course, there are sea change places like Gold Coast, Cairns,
Sunshine Coast but also Ocean Grove-Barwon Heads and
Morisset-Cooranbong. I’ll also add in strong regional centres that
act like de facto capital cities commanding a broad, prospering
service region. These include places like Bathurst, Ballarat,
Orange, Bendigo and Toowoomba. All of these cities and towns
have increased their population bases by more than 1.5 per cent
over the most recent 12-month period that population figures
The best possible investment situation comes about when
there are several factors driving a town. I’ve always liked
Townsville for this reason. It offers sea change, resources and
military and it’s growing at a rate of 2.4 per cent per year. I also
like Mackay for the same reasons. Even though it doesn’t have a
military presence, it offsets this with a stronger resources role.
Before you invest in any town in Australia, make sure you
track how that town has performed in terms of attracting new
residents, and therefore potential owners and tenants, through
population growth figures.
I’ve always thought that a community retains its vitality when
it has a population growth rate of no less than 1.5 per cent per
year. Rates of population growth are yet another tool for the
canny to discern the best places to invest. API
Founder and head of KPMG Demographics; firstname.lastname@example.org
Investing in Australia’s
æThe best possible investment
situation comes about when
there are several factors
driving a town.Æ
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