Surging interstate migration set to fuel the next wave of Queensland constructionWednesday, 14 February 2018
Queensland's net interstate migration is beginning to surge as the median house price gap between Sydney and Brisbane increases. This is welcome news to the construction sector widely fearing a market slowdown.
Traditionally Queensland has been a net recipient of interstate migrants, driving construction demand in Brisbane, the Gold Coast and Sunshine Coast.
As interstate arrivals boost the population, construction of schools, hospitals, shopping centres, transport and housing usually follows giving the local economy a much needed boost.
Historically when there is a significant difference between median house prices in Brisbane and Sydney or Melbourne people move to the Sunshine state.
For example, between 2002 and 2004, Sydney median house prices were almost double those in Brisbane. Then, as this chart illustrates, net interstate migration was almost 10,000 per quarter (40,000 per year). According to the latest Australian Bureau of Statistics data, median house prices in Sydney recorded at $1 million are once again twice Brisbane's median house price.
"Based on previous experience the current house price differential could drive a significant acceleration of interstate migration, perhaps reaching as many as 50,000 interstate movers per year. If this occurs all construction sectors, not just residential, should receive a significant boost" said Dave Liddle, Director of Property at Turner & Townsend.
The period from 2002 to 2004 when interstate migration was so high also corresponds to a period of strong construction growth in Queensland across all sectors. During 2002 construction was growing at above 30% per annum.
As the gap in median house prices reduced from 2005-2009 construction growth declined.
By 2009, Brisbane house prices were almost on a par with those in Sydney, resulting in a substantial decrease in interstate migration in 2010 as the attraction of moving north diminished.
Now that the gap in median house prices has opened up again moving to Queensland presents renewed appeal.
Baby boomers are not the only group likely to be attracted to moving north. Young families rapidly losing hope of buying a liveable Sydney home will also be attracted. Whilst the residential sector is usually the first to grow, the flow on effect will drive demand for more schools, transport and entertainment.
This will be a positive shift for the property industry. Apartment building approvals fell 50% over the second half of 2016, reflecting fears the market was becoming oversupplied. Non-residential construction has also fallen by 23% since 2010.
With unprecedented arrivals of interstate migrants predicted, government and developers will be encouraged to plan and resume construction to meet this demand. Encouragingly the value of non-residential building approvals is up 15% for the first six months of 2017 compared to the same period last year.
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