In 1990 Bob Hawke was prime minister, INXS was playing on the radio, the economy was in recession and there were just 17.2 million Australians. In the 27 years since then, the nation’s population has surged more than 40 per cent to 24.5 million and is forecast to continue on its growth trajectory.
Australia’s strong population growth brings fundamental economic and investment implications, including increased infrastructure and housing investment.
The number of Australians is growing at 1.6 per cent each year, ahead of the global population growth rate of 1.2 per cent a year. This equates to an increase of one billion people every 12 to 14 years, which will see the total global human population reach 10 billion by 2055, up from 7.6 billion today.
Just as significant as the massive increase in the global population are the likely changes over the next 50 to 100 years to the composition of the world’s population, including Australia, in terms of age profile, location and levels of urbanisation.
Across most nations, falling fertility and mortality rates have led to higher average ages, with the proportion of elderly greater than the proportion of children.
A proportionally large aging population is now a worldwide phenomenon, particularly in developed nations. With scientific advancements helping to prolong life, this trend is set to continue. Remarkably, the average life expectancy of someone born in 1980 is now 100 years, while the first person to live to 150 years is already likely to have been born.
In the coming decades, the bulk of global population growth will be concentrated in developing nations, with half of forecast growth to be in Africa.
By 2050 Africa will have three times the population of Europe. Already, Africa’s population is 1.2 billion versus Europe’s 743 million although the two continents had equal populations in 2000.
With an average birth rate of 5.6 children per woman, Nigeria in West Africa is predicted to become the third most populous nation on earth by 2050, behind India and China. With the steady decline in Chinese birth rates, India is on track to overtake China as the world’s most populated nation within the next six years.
Australia reflects many of these population trends. But unlike most developed nations, we have a relatively high rate of population growth.
Australia’s growth has been accelerating, particularly in recent decades, with the population increasing almost 20 per cent in the last decade alone.
This increase has been driven largely by high levels of net overseas migration, which accounts for 60 per cent of population growth. Latest data shows that over the year to March, overseas migration increased sharply, up 26.9 per cent or more than a quarter of a million, to post the highest annual increase on record.
Victoria’s population is expanding at the fastest rate among all states and territories, with net overseas migration jumping 27.7 per cent over the last year. Victoria is expected to continue growing, with Melbourne on track to takeover Sydney as Australia’s largest city within the next 20 years.
Taking into account variable rates of births, deaths and net migration, modelling by the Australian Bureau of Statistics predicts Australia will be a nation of between 35.7 million and 45.4 million by 2056.
With the population forecast to increase by more than 20 million in the next four decades, there are a range of economic and government policy implications for Australia.
Continued population growth will drive Australia’s economy as consumption increases and governments’ revenue bases are expanded as more people pay taxes.
The increasing population will also stimulate the economy across a number of sectors, particularly housing and infrastructure. With more Australian residents, particularly in the capital cities, there will be greater demand for residential property. Similarly, state and federal governments will need to meet increased infrastructure needs through investment in major projects, such as roads, public transport, schools and hospitals.
Australia’s forecast population growth will increase demand for housing investment and government infrastructure spending, and these sectors will remain key contributors to Australia’s economic growth into the future.
Businesses in these sectors, such as residential property developers and construction companies, will be influenced by this major demographic trend for many years to come.
Listed companies positively exposed to Australia’s increasing population include residential developers Peet and Cedar Woods Properties, engineering and infrastructure management company Downer EDI, construction contractor Cimic, engineering firm RCR Tomlinson and building and property company Lend Lease.