Marvellous R E B O R N Victoria is in the midst of massive population growth but how will Australia s cultural capital fare in the future? December 2017
Contents 3 5 6 7 7 7 8 8 9 11 MARVELLOUS MELBOURNE REBORN A new growth paradigm? Growth goes through the roof How do populations change and grow? What is driving Victoria s population growth? More births Increasing life expectancy The ageing population A magnet for migration from overseas More arrivals from interstate 12 13 13 13 14 15 16 17 17 18 19 20 20 21 FUTURE OUTLOOK How long will this growth spurt last? How will the population grow? Victoria Melbourne Regional Victoria How will the age profile change? Changing population and housing trends Changes to the way we live Shifting residential development A swing back to established areas Corridors of growth Lack of greenfield growth Overspill into regional Victoria 2 MARVELLOUS MELBOURNE REBORN
PART 1 MARVELLOUS MELBOURNE REBORN Melbourne s population has changed over its lifetime, influenced by economic rises and falls and periods of cultural growth and change. While the population has ebbed and flowed over the years, one of the most remarkable eras of change is happening right now. We take a look at what s driving Victoria s current period of population growth and use.id s Small Area Forecast information (.id SAFi) to explore the state s future population. 3 MARVELLOUS MELBOURNE REBORN
Marvellous Melbourne reborn Following European settlement in 1836, Melbourne s population counted a mere 200 residents. The population ballooned during the gold rush of the 1850s, fuelling the initial Marvellous Melbourne period of the late 1880s. The era saw Melbourne rapidly grow to be larger than many European cities and gave rise to many of Melbourne s iconic structures including the Royal Exhibition Building, Parliament House and the railway and tram network. The economic collapse of the 1890s temporarily stunted Melbourne s growth but the population picked up during the post-world War II baby and migration boom of the 1950s. The recession we had to have in the 1990s negatively impacted population growth for a time as Victorians sought opportunities elsewhere, although this is now a distant memory. Melbourne is currently in the midst of unprecedented population growth reminiscent of the period when Marvellous Melbourne first emerged, reaching more than 4.86 million people in 2017. CHART 1 POPULATION OF MELBOURNE 1836-2041 8 7 Marvellous Melbourne reborn 6 5 1990s recession PEOPLE (MILLIONS) 4 3 2 Gold Rush Marvellous Melbourne 1880s downturn Post-war baby and migration boom 1 0 1836 1848 1860 1872 1884 1896 1908 1920 1932 1944 1956 1968 1980 1992 2004 2016 2028 2040 Compiled and presented by the population experts. 4 MARVELLOUS MELBOURNE REBORN
A new growth paradigm? Melbourne is the powerhouse of population growth for Victoria. The population in Victoria s growing faster than the national average but how long can this trend continue? Current population growth in Victoria reflects a balance of growth which favours the eastern states. However, it was only recently that the balance tipped in favour of Australia s mining states. In the early 2000s, population growth was strong in Queensland and to a lesser degree in Western Australia, driven by employment growth and the promise of a new life in sunny climes. Victoria had already begun to recover from the recession of the early to mid-1990s but Sydney was suffering from the post-olympics headache. By the latter part of the decade, the mining investment boom was at its height. Population growth was skewed towards Western Australia and to a lesser degree, parts of regional Queensland. The media and commentators heavily focussed on these areas as the primary drivers of economic growth and prosperity for Australia. South-East Queensland was growing at lower rates than previously, as the tourism industry struggled to compete internationally. Since 2016, population growth has swung back to the eastern states, strongly towards Victoria and New South Wales, with most growth generated in Sydney and Melbourne. Melbourne has benefitted from a focus on education exports, with Victoria s share of national tertiary students rising from 22.9 % in 2011 to 24.7% in 2016. This has seen a two-speed economy within Victoria, with education and specialised business services prospering, while areas associated with agriculture and manufacturing struggle. SHARE OF POPULATION GROWTH IN AUSTRALIA 2002 2009 2017 11% 21% 16% 25% 5% 20% 31% 37% 25% 25% 26% 38% VIC NSW QLD WA OTHER STATES AND TERRITORIES 5 MARVELLOUS MELBOURNE REBORN
Growth goes through the roof Victoria s population reached 6.33 million in 2017. While Victoria s population historically grows at a slower rate than Australia, in the last 7 years there has been a reversal of trends with the state growing at a rate equal to or greater than Australia. In the decade to 2016, Victoria s population growth was more than double that of the previous decade - a complete reversal from the population stagnation seen in the early 1990s. To provide broader context, Victoria s population growth rate is more than double the world s current average growth rate. CHART 2 POPULATION GROWTH RATE, VICTORIA AND AUSTRALIA 1972-2016 3.% 2.5% Victoria Australia Victoria grows above Australian average ANNUAL GROWTH RATE 2.0% 1.5% 1.0%.5% 0% 1972 1977 1982 1987 1992 1997 2002 2007 2012 2016 Compiled and presented by the population experts. Source: ABS, Australian Historical Population Statistics (Cat. 3105.0), 2014. ABS, Australian Demographic Statistics (Cat. 3101.0), 2017. POPULATION GROWTH IN VICTORIA 2006 VS 2016 In 10 years, the amount of growth has doubled from an average of 200 to 400 people per day. YEAR 2006 YEAR 2016 400 PEOPLE PER DAY AVERAGE INCREASE 6 MARVELLOUS MELBOURNE REBORN
% How do populations change and grow? The number of births, deaths and different types of migration (between neighbourhoods, regions, states or from overseas) lead to growth or decline in the population. These forces play out differently across states, regions and suburbs. Trends in life expectancy and fertility rates are slower moving but also play a role in population change. What is driving Victoria s population growth? The combined effect of more births, along with increases in life expectancy and net migration in Victoria is contributing to strong population growth. MORE BIRTHS The number of births in Victoria was comparatively steady from 1976 to 2002. The fertility rate had been on a long-term decline since the 1960s, a trend that was expected to continue in the future. Since 2002 the trends turned around, with over a million babies born in Victoria (1,055,400), of which nearly 750,000 were born in the last decade. The fertility rate has risen in recent years, fluctuating above the trend that had been assumed from the early 2000s. CHART 3 FERTILITY RATES AND NUMBER OF BIRTHS, VICTORIA 1976-2016 BIRTHS 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 growth in births Total fertility rate Births Assumed trend 2.5 2.0 1.5 1.0 0.5 TOTAL FERTILITY RATE 0 0 1976 1981 1986 1991 1996 2001 2006 2011 2016 Compiled and presented by the population experts. Source: ABS, Australian Historical Population Statistics (Cat. 3105.0), 2014. ABS, Australian Demographic Statistics (Cat. 3101.0), 2017. 7 MARVELLOUS MELBOURNE REBORN
INCREASING LIFE EXPECTANCY As our standard of living improves, Australians are living longer. In Victoria, females have a higher life expectancy (85.7 years) than males (82.4 years) in 2016. The gap in life expectancy between males and females has narrowed from 6.5 years in 1981 to 3.3 years in 2016. CHART 4 LIFE EXPECTANCY FOR MALES AND FEMALES, VICTORIA 1981-2015 AGE 90 85 80 75 70 65 60 Female Male gap narrows 1981 1986 1991 1996 2001 2006 2011 2015 Compiled and presented by the population experts. Source: ABS, Australian Historical Statistics (Cat. 3105.0) 2014. ABS, Deaths (Cat.3302.0) 2016. ABS, Life Tables (Cat. 3302.0) 2016 THE AGEING POPULATION Despite improving life expectancy, the number of deaths in Victoria has increased as the population grows and ages. While the average number of deaths has steadily crept up over past decades, it has been offset by faster growth in the number of births. CHART 5 DEATHS, VICTORIA 1976-2016 45,000 40,000 35,000 steady increase 30,000 DEATHS 25,000 20,000 15,000 10,000 5,000 0 1976 1981 1986 1991 1996 2001 2006 2011 2016 Compiled and presented by the population experts. Source: ABS, Australian Historical Population Statistics (Cat. 3105.0), 2014. Deaths, Australia, (Cat. 3302.0) 2016. 8 MARVELLOUS MELBOURNE REBORN
A MAGNET FOR MIGRATION FROM OVERSEAS Victoria s population growth has been more remarkable given the context of recent pressure on its industry competitiveness. During the mining investment boom, the high value of the Australian dollar made it difficult for key Victorian industries such as food manufacturing and agriculture to compete and was associated with the demise of the car industry. CHART 6 NET OVERSEAS MIGRATION, VICTORIA 1976-2016 90,000 vocational education exports peak 80,000 NET OVERSEAS MIGRATION 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 1976 1981 1986 1991 1996 2001 2006 2011 2016 Compiled and presented by the population experts. Source: ABS, Australian Historical Population Statistics (Cat. 3105.0), 2014. ABS, Australian Demographic Statistics (Cat. 3101.0), 2017 Despite the substantial employment opportunities in Western Australia during the resources boom, Victoria managed to maintain a quarter of net overseas migration to Australia (slightly higher than its long-term average). Consequently, migration to Victoria peaked in 2009 (83,600), coinciding with Australia s peak (299,900) during the recent mining boom. THE AVERAGE NUMBER OF PEOPLE ARRIVING IN VICTORIA THROUGH OVERSEAS MIGRATION EACH YEAR HAS MORE THAN DOUBLED, COMPARED TO THE PREVIOUS DECADE. YEAR 1996 YEAR 2006 YEAR 2006 27,100 60,800 PEOPLE ON AVERAGE P.A. PEOPLE ON AVERAGE P.A. YEAR 2016 9 MARVELLOUS MELBOURNE REBORN
With the end of the mining boom in Western Australia and Queensland, Victoria secured a larger share (almost 40%) of Australia s overseas migration. Historically, only New South Wales attracted over 40% of Australia s overseas migration, while Victoria averaged around 25%. Over the past 10 years, the gap between Victoria and New South Wales has narrowed substantially as Victoria has experienced a higher share. CHART 7 SHARE OF AUSTRALIA S NET OVERSEAS MIGRATION, SELECTED STATES 1972-2016 SHARE OF NET OVERSEAS MIGRATION 60% 50% 40% 30% 20% 10% 0% VIC NSW QLD WA SA Sydney and Melbourne attract a higher share 1972 1977 1982 1987 1992 1997 2002 2007 2012 2016 Compiled and presented by the population experts. Source: ABS, Australian Historical Population Statistics (Cat. 3105.0), 2014. ABS, Australian Demographic Statistics (Cat. 3101.0), 2017 THE END OF THE MINING BOOM IN WESTERN AUSTRALIA AND QUEENSLAND VICTORIA SECURES A LARGER SHARE OF AUSTRALIA S OVERSEAS MIGRATION 10 MARVELLOUS MELBOURNE REBORN
MORE ARRIVALS FROM INTERSTATE Victoria s past is mainly characterised by population flowing out of the state, with 1994 seeing the greatest number of residents leaving in recent times (29,200). During the mining boom, Victoria remarkably managed to maintain net population gain from other states in Australia. The end of the mining boom has seen interstate migration increase substantially. It is estimated that Victoria gained from all states and territories in net terms over the past eight years - a far cry from the early to mid-1990s. CHART 8 NET INTERSTATE MIGRATION, VICTORIA 1976-2016 20,000 10,000 from Rustbelt state...to education & technology economy trend reversal 0 PEOPLE -10,000-20,000-30,000-40,000 1976 1981 1986 1991 1996 2001 2006 2011 2016 Compiled and presented by the population experts. Source: ABS, Australian Historical Population Statistics (Cat. 3105.0) 2014. ABS, Australian Demographic Statistics (Cat. 3101.0), 2017 YEAR 1996 YEAR 2006 100 PEOPLE ON AVERAGE P.A. YEAR 2006 YEAR 2016 4,700 PEOPLE ON AVERAGE P.A IN THE LAST DECADE, AN AVERAGE OF 4,700 PEOPLE ARRIVED IN VICTORIA EACH YEAR FROM INTERSTATE - A MASSIVE INCREASE FROM THE PREVIOUS DECADE S AVERAGE OF 100. 11 MARVELLOUS MELBOURNE REBORN
PART 2 FUTURE OUTLOOK What does the future hold for Marvellous Melbourne? Victoria s population growth is driven by employment opportunities in Melbourne, which in turn is driven by changing economic forces as the state transitions to a modern knowledge economy. The legacy of the Marvellous Melbourne period remains important to the fabric of Melbourne today. Many of great civic buildings as well as the Melbourne train and tramway network stand as a testament to the period. The hope is that the current boom delivers as many benefits as that of the 1870s and 1880s. 12 MARVELLOUS MELBOURNE REBORN
How long will this growth spurt last? While Victoria and Melbourne have been experiencing unprecedented population growth, it is assumed that population growth rates will slow in the future. This is due to the ageing of the population (where deaths increase at a faster rate than births) and a rebalancing of population growth in Australia (where resource-rich states of Western Australia and Queensland see a return to growth in the medium term). How will the population grow? VICTORIA Victoria grew by an average of 2.1% p.a. in the decade to 2017. Population growth is expected to continue to be the fastest in Australia (1.9%) for the decade ahead (2017-2027). In the longerterm Victoria s population growth rate (1.5%) will remain above the national average (1.3%). The high rate of population growth being experienced in Victoria is expected to return to more moderate levels from around 2022. This is due to reductions in the levels of net migration (interstate and overseas) and a return to growth in Western Australia and Queensland. VICTORIA S POPULATION IS SET TO INCREASE BY 2.5 MILLION PEOPLE IN THE NEXT 20 YEARS 13 MARVELLOUS MELBOURNE REBORN
MELBOURNE Metropolitan Melbourne s population has grown by more than a million people in the last decade, topping 4.86 million in 2017. Strong population growth is forecast in the decades ahead, with Melbourne expected to grow by a similar amount (2.1% from 2017 2027). In the following decade to 2037, the rate of population growth will slow (1.6%) in line with Victorian trends, as the population closes in on 7 million by 2037. MELBOURNE ADDED... OVER 1 MILLION PEOPLE IN THE PAST 10 YEARS. YEAR YEAR YEAR 2017 4.86 MILLION 5.96 2027 2037 MILLION 6.98 MILLION 2.4% 2007-2017 10-YEAR AVERAGE ANNUAL CHANGE 2.1% 2017-2027 1.6% 2027-2037 The share of the state s population living in metropolitan Melbourne compared with regional Victoria continues to increase from 75% in 2007, to 77% in 2017 and reaching 79% by 2037. Melbourne accounted for 86% of Victoria s population growth in the decade to 2017. As Melbourne begins to overspill into neighbouring areas, its share of the state s population growth will decrease to 83% in 2037. 14 MARVELLOUS MELBOURNE REBORN
REGIONAL VICTORIA Regional Victoria was home to 1.48 million people in 2017, accounting for 23% of Victoria s population. This is expected to grow to 1.89 million in the next 20 years as regional Victoria s diverse and prosperous primary industries offer an alternative to investing in Melbourne. Although Melbourne has the dominant share of Victoria s population growth, overspill from Melbourne into neighbouring regions in the future will see regional Victoria secure an increasing share of the state s population growth from 14% in 2007 2017 to 17% from 2027-2037. IN THE DECADE TO 2017 REGIONAL VICTORIA GREW BY 165,000 PEOPLE TO REACH 1.48 MILLION YEAR YEAR YEAR 2017 2027 2037 1.48 MILLION 1.68 MILLION 1.89 MILLION 10-YEAR AVERAGE ANNUAL CHANGE 1.2% 2007-2017 1.3% 2017-2027 1.2% 2027-2037 15 MARVELLOUS MELBOURNE REBORN
How will the age profile change? As populations grow or change, the age structure often changes too. This has implications for service providers delivering services such as early childhood education services or retirement living support to different age groups. Victoria has a higher percentage of young adult age groups (20-24, 25-29, and 30-34 year olds) than Australia, with these groups collectively accounting for almost a quarter of the population (22.9%). Increased levels of migration have affected this large group of family-forming adults, as both overseas and interstate migration into Victoria is heavily concentrated in youthful age groups, especially compared to Western Australia or Queensland. As we forecast how Victoria s population will change in the next 10 years, we can see three distinct peaks in population growth across the age groups. Large increases in the number of children and teenagers (aged 0-19 years), parent and workforce ages (aged 30-44 years), as well as senior age groups (aged 65-84 years) are forecast in the next decade. So, while the baby boomer bulge remains prominent, we can see two additional population peaks in children and family forming adults. CHART 9 FORECAST POPULATION CHANGE BY AGE GROUP, VICTORIA 2017-2027 160,000 3 growth markets 140,000 120,000 100,000 CHANGE 80,000 60,000 40,000 20,000 0 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90+ Compiled and presented by the population experts. Source:.id SAFi Victoria 2017 FIND OUT MORE ABOUT AUSTRALIA S THREE GROWTH MARKETS HERE READ EBOOK 16 MARVELLOUS MELBOURNE REBORN
Changing population and housing trends CHANGES TO THE WAY WE LIVE In the past, there has been a close relationship between the number of houses being built and the level of demand through population growth. Since 2005 in Victoria, population growth has far outstripped dwelling growth. This indicates continued pent up demand for housing, evidenced by how hot the property market is. Should demand continue to outweigh new housing supply, the average number of people living in each household will continue to increase, as well as pressure on the number of vacant dwellings. CHART 10 COMPARISON OF BUILDING APPROVALS AND POPULATION GROWTH, VICTORIA 1991-2016 160,000 140,000 120,000 100,000 Population growth Building approvals population growth outstrips new housing NUMBER 80,000 60,000 40,000 20,000 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Compiled and presented by the population experts. Source: ABS, Australian Demographic Statistics (Cat. 3101.0) 2016. ABS, Building Approvals, Australia (Cat. 8731.0) 2017. FOR MORE ARTICLES AND ANALYSIS ABOUT POPULATION GROWTH AND HOUSING TRENDS, EXPLORE OUR BLOG CLICK HERE 17 MARVELLOUS MELBOURNE REBORN
SHIFTING RESIDENTIAL DEVELOPMENT Residential development patterns influence the way populations change in different places. Over the past twenty years, we ve seen some notable changes in development patterns across Melbourne. Development has shifted from the east and the south of the city to a higher share in the inner city, west and north. CHART 11 MELBOURNE S URBAN FOOTPRINT 1996 AND 2016 1996 2016 Compiled and presented by 18 the population experts. MARVELLOUS MELBOURNE REBORN
A SWING BACK TO ESTABLISHED AREAS Following the property boom of the 1980s, a lack of residential development in established parts of Melbourne meant growth was mainly experienced on the periphery of the city including surrounding semi-rural areas. More than half of Melbourne s development traditionally occurred in greenfield and rural areas. In the past five to ten years, Melbourne s established areas have flourished as more population growth is concentrated in older parts of Melbourne. Following a similar path to Sydney, Melbourne s share of development in established areas has risen dramatically. Development has been more concentrated in former industrial areas, on surplus utilities land and around major transit nodes, but most parts of established Melbourne have experienced an upswing in residential development. The share of development in greenfield areas remains higher in Melbourne than in Sydney where only about a quarter of development occurs in greenfield areas. While development rates have been impressive in greenfield areas of Wyndham, Melton, Hume, Whittlesea, Casey and Cardinia LGAs, development in areas beyond the metropolis has been more circumspect. The shift towards development in established areas is fuelled by the ability to meet demand from changing population growth, policy decisions around medium and higher density growth, development industry activity, rising housing prices, and structural changes in the economy as we move from a substantial manufacturing workforce to a knowledge workforce concentrated in the inner city. There are also growing concerns over commuting times and congestion on roads in Melbourne. The trend towards development in established areas is expected to continue, remaining at about 60% into the future. CHART 12 SHARE OF DEVELOPMENT IN ESTABLISHED AREAS, SYDNEY AND MELBOURNE 1991-2016 80% 60% Sydney Melbourne 40% SHARE 20% 0 1991-1996 1996-2001 2001-2006 2006-2011 2011-2016 CENSUS PERIOD Compiled and presented by the population experts. Source: ABS Census of Population and Housing, 1991, 1996, 2001, 2006, 2011, 2016. 19 MARVELLOUS MELBOURNE REBORN
CORRIDORS OF GROWTH There are six large greenfield corridors in Melbourne located in the LGAs of Wyndham and Melton to the west, the northern corridor of Hume and Whittlesea, and the southern corridor of Casey and Cardinia. Combined, they are expected to absorb around 40% of future dwelling growth to 2041. The northern and western corridors have more developable land in the long term - Whittlesea and Hume LGAs have about 5-10 years supply at 2041, with remaining land being heavily concentrated in the north of these areas and around Sunbury and Melton. Part of the reason for the greater supply in these northern areas is the large amount of zoned residential land in Mitchell Shire which is assumed to absorb more metropolitan demand over time. Similarly, the City of Melton has vast stocks of greenfield land and it is expected that Melton will play a greater role in greenfield housing supply into the future. As land supply reduces in the growth corridors of Melbourne, policy decisions from Government about future growth become more important. The history of residential development in Melbourne suggests that the Government is likely to identify further areas for growth, although it s possible that some corridors will slow considerably. The high rate of population growth in Melbourne means that there will not be enough greenfield land beyond 2041 in some corridors. In the longer term, the areas most affected by a lack of greenfield land include the South-East growth corridor (Casey and Cardinia LGAs) and the South-West (Wyndham LGA). If Melbourne had continued along its previous path where over 60% of development occurred in greenfield areas (as was the case between 2001 and 2011), there would be a profound shortage of greenfield land by the mid-2030s. CHART 13 FORECAST URBAN FOOTPRINT, MELBOURNE 2041 Compiled and presented by the population experts. 20 MARVELLOUS MELBOURNE REBORN
OVERSPILL INTO REGIONAL VICTORIA The fastest growing regions outside of Melbourne are expected to be in: Peri-urban (fringe) areas, such as Mitchell, Macedon Ranges, Moorabool and Baw Baw Major regional centres such as Geelong, Ballarat, Bendigo and Mildura Lifestyle areas such as Surf Coast and Bass Coast The fast growth of these regions in the future continues previous trends, although more recently their growth has changed in relative terms to Melbourne, as the metropolis absorbs a much greater share of growth. As Melbourne increases in size, there is likely to be a ripple effect on regional areas as the level of overspill into neighbouring regions steadily increases. Peri-urban areas will feel the impact of this overspill, with Mitchell, Greater Geelong and Baw Baw LGAs most likely to be affected. CHART 14 FORECAST DWELLING CHANGE, BY LOCAL GOVERNMENT AREA, VICTORIA 2017-2037 2017-2027 Mitchell Shire AREAS FORECAST DWELLINGS Difference between 2017 and 2027 0 to 5% 5 to 10% 10 to 15% 15 to 25% 25%+ City of Greater Geelong 2027-2037 Baw Baw Shire Mitchell Shire AREAS FORECAST DWELLINGS Difference between 2027 and 2037 0 to 5% 5 to 10% 10 to 15% 15 to 25% City of Greater Geelong 21 25%+ Compiled and presented by the population experts. Source:.id SAFi, Victoria 2017 in.id Placemaker. MARVELLOUS MELBOURNE REBORN
About.id s Small Area Forecast information.id s team of population forecasters analyse the dynamics of population change to produce granular population forecasts. In Victoria, these forecasts are produced for over 7,000 micro-geographic areas and are used by businesses, governments and organisations to inform decision making and planning. These SAFi population forecasts, updated for Victoria in 2017, form the basis of this ebook. 10 Easey Street Collingwood VIC 3066 P (03) 9417 2205 E info@id.com.au id.com.au copyright 2017.id Consulting Pty Ltd ACN 084 054 473 All rights reserved This ebook has been produced by.id (Informed Decisions) Pty Ltd ACN 136 538 951 in December 2017 for interested parties to use as a resource. While we do our best to make sure the content is informative, we take no responsibility for the actual content and how it is used..id own or are entitled to use all the content in this ebook. We are happy for you to replicate small parts our ebook content but you need to attribute ownership rights where ever and whenever you use this information. You cannot reproduce our ebook or give away copies, but if you would like to use any content, please refer to our Terms of Use which set out how you can use our ebook and attribute the content appropriately. This ebook remains part of our website content, even when it has been downloaded. Hopefully you enjoy reading our ebook as much as we enjoyed making it for you. 22 MARVELLOUS MELBOURNE REBORN