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Lagging Infrastructure Investment, Immigration and Population Growth Impact On Supply

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There’s a lack of innovation, vision and infrastructure investment, that has for many years lagged behind both immigration levels and natural population growth. This disconnection will remain a major issue into 2020 and for decades to come impacting almost every level of development and supply and the demand for housing.

In a report The Economic Impact of Migration published by the Migration Council of Australia the importance of migration was clearly highlighted as a key economic indicator putting migration central to Australia’s future prosperity.

“Australia’s projected population will be 38 million by 2050 and migration will be contributing $1,625 billion (1.6 trillion) to Australia’s GDP. Moreover, migration will have added 15.7% to our workforce participation rate, 21.9% to after tax real wages for low skilled workers and 5.9% in GDP per capita growth.

“Overall, by 2050, each individual migrant will on average be contributing approximately 10% more to Australia’s economy than existing residents.”

The importance of immigration and population is expected to come into much sharper focus in 2020 and may well come at a time when residential development and home building are in rapid decline. This fact, in combination with lagging infrastructure may further reduce affordability, push up rents and create price pressures in the most sought-after markets.

It’s a point that concerns the widest spectrum of the industry as some of the following comments clearly illustrate.

Adrian Pozzo, CEO Cbus Property:

“I believe, it is true that we are currently seeing the tail end stock of apartments in some markets being absorbed, and that has the potential to further reduce supply in 2020 however, you never really know the full extent until it happens, and all tail stock is sold.”

“Immigration is an essential driver of population growth and you cannot simply shut the gates.  We need a measured increase, a sensible and ongoing increase.”

“In part, immigration has become an issue in cities and regions where there’s a combination of under supply and an ongoing push for development without the support of infrastructure.”

“We often have development and population growth running ahead of infrastructure and this pushes the boundaries of social tolerance.  I see various figures quoted like $42 billion of infrastructure being spent, however, this is only catch-up.  On completion of these infrastructure works, we are again ‘behind the eight ball’.”

There’s also the reality that urban growth along with the delivery of infrastructure would benefit from a more co-operative community wide approach. Cities change and never wanting development ‘in my own backyard’ doesn’t work.

“Development and change in and around cities, is the true opportunity.  However, there needs to be a plan, a long-term plan and that very much includes value-adding infrastructure, it is not reasonable to just say no to future inner-city development.”

According to Adrian the delivery of infrastructure would be better served if there was a longer-term and more co-operative view adopted across all States and Councils.

“I believe our current system is based around parliamentary terms, and as such, a more co-operative approach between all statutory authorities would be a very positive outcome for the future of cities.”

Scott Hutchinson, Chairman of Hutchinson Builders: “We need population growth and that includes immigration.

“However, perhaps a more measured rate of growth is possible. What we need to avoid is over stretched activity underwritten by a profitless boom as we try to meet demand. A workable level of population growth might help get things back to a sensible level of activity.”

Scott also suggests that a strong housing and development market will not just happen or happen by accident and he counts timely infrastructure and co-operative and enlightened planning at the local government level as key.

According to Scott, in the face of rising demand for more housing, poor planning can delay or even see developments abandoned.

“There are times when it appears the rules are being made up ‘on the go’ as a DA or a development makes progress, and some requirements are crazy, they do not impact quality, they are subjective and so that greatly impacts costs and can also greatly reduce the ability to create employment.”

Don O’Rorke, CEO & Chairman, Consolidated Properties Group: “Immigration and population growth are the engines of the economy.

“Any pressure for reduced immigration, should in my view be resisted. Currently the baby-boomer generation is a dominant economic force, that’s positive, but at its peak. New growth is a positive and creates more diverse demand.”

“However, population growth and infrastructure are complex questions, if stronger population growth is to be encouraged, then state governments must have policies in place to deliver sufficient housing.”

Don, however, does not think that the industry requires any more rules or regulation in order to deliver more housing, but suggest that diversity of supply is more important and like others the role of councils is important.

“To meet the demands of population growth, be that immigration or interstate migration, we must have diversity in the housing market, and that includes brownfield and greenfield sites.

“It sensible to create smaller 1-bedroom apartments on central infill sites but it’s not possible to build an affordable 4-bedroom house in such areas. Here greenfield sites offer quicker solutions at a lower cost. Infill sites with medium density are also more a trend with inner-city locations.”

A Holistic Approach in 2020

The links between population growth, infrastructure, housing supply and demand look obvious however, they present major economic policy and planning issues. On one hand we face pressures over housing affordability, and calls to restrict immigration however, immigration is an essential driver of our economy that also adds a great deal to Australia’s social fabric.

In research published by WPPAUNZ it was noted that ‘almost two-thirds of Australians say that the very best thing about Australia it its rich and diverse multicultural population.’

The same report highlights the fact that 61% of Australians want a policy shaped towards a more progressive and technology driven country and I’d suggest that this more innovative aspiration might also benefit the housing market and the delivery of modern infrastructure well beyond 2020.

It’s already clear what some of the big trends impacting next year will be and I’m looking forward to summing up in a few weeks.

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Peter Chittenden

Managing Director | Residential


Sydney CBD

My professional knowhow stems from an extensive career in Residential property development, project marketing, site acquisition and property valuation.

I rejoined Colliers International 11 years ago as Managing Director, and since then I have worked to grow my team and our Residential division by more than 300%.

Across the country we have successfully launched and sold over 100 Residential projects, and we have played an instrumental role in every aspect of these successes for our clients.

I have built a team that offers the complete end to end service for our clients and customers alike, from the site aquisition right through to the sale and settlement of every last apartment. 

My 30+ years of experience in real estate, and genuine passion for property has seen me involved across numerous key industry bodies and groups, as well as the establishment of my own thought leading blog, with over 4000 followers from within the industry. 

Prior to my time at Colliers International, I held the position of National Sales and Marketing Manager for Stockland Apartments. During his time I launched and managed a national portfolio of major projects and led a large national sales and marketing team. Prior to this, I started and ran my own successful project marketing company, Realm Project Marketing, for three years specialising in large land estates, housing and apartment projects predominantly in NSW, providing a high level of service that extended beyond the traditional sales appointment.

In my earlier role at Colliers International I was the National Director, Residential Land Marketing, where I established a highly successful division which led to the appointment of our business to project market several major estates in Sydney and Melbourne, which commenced long lasting relationships that our business still maintains today. 

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