Does dwelling growth lead to population growth?

One of the more common misconceptions about population change is the relationship with dwellings and household structure. Many people assume that new dwellings means an increase in population. But as with most things in the demographic world, the reality is more complex. As demographers, we look at the types of households that occupy these dwellings – or in fact if the dwelling is indeed occupied. How people occupy dwellings, or the types of households they create, is a critical element of population growth and change. At .id, we place considerable emphasis on the role and function of small areas in our forecasting work, because we know that these differ across time and space. Let’s look at some examples in South Australia where our assumptions about households and dwellings result in quite different population outcomes.

Adelaide – the inner city

Like other inner city areas in metropolitan Australia, Adelaide City Council is being transformed by the construction of high rise apartment buildings. Despite coming off a small base, population growth has been quite rapid in recent years. Census data shows that the age structure is dominated by twenty-somethings – and in fact Adelaide’s population growth is primarily about the movement in and out of the City by young adults. The small size of apartments means that they are more likely to be occupied by small households i.e. lone person or couple households, rather than larger families. In 2011, more than one-third of households were occupied by one person, and the average household size was just 1.86 persons. Furthermore, because a high proportion of households are rented, the vacancy rate tends to be slightly higher when compared to suburban areas due to tenancy turnover.

Population forecasts prepared by .id indicate a large number of prospective projects in the pipeline that are either under construction at June 2015, or are assumed to be constructed in the short to medium term. The small size of apartments, coupled with historic trends, lends itself to an assumption that future households will continue to be small. The growth of lone person and couple without children households is assumed to be dominant over the forecast period, with average household size remaining fairly stable at 1.9 persons.

Alexandrina – the coastal area

Alexandrina Council is located on the Fleurieu Peninsula south of Adelaide. The natural amenity of the region, coupled with improving access to Adelaide, means that it has grown rapidly in recent decades. Its coastal towns, including Goolwa, Hindmarsh Island and Port Elliot, have long been favoured holiday destinations. As a result, there are a very high proportion of vacant dwellings – around 30% in 2011. This proportion varies across the municipality with the proportion of vacant dwellings much higher in coastal areas, but lower in the north around towns such as Strathalbyn and Mount Compass.

Like Adelaide, Alexandrina also tends to have small households – couples without children are the main type, comprising more than one-third of all households and lone person households another quarter. However the age structure in Alexandrina is different with a greater proportion of older residents. As a result these small households have an impact on population growth but the added variable in Alexandrina is the large proportion of unoccupied dwellings. One of the key issues when forecasting in coastal areas is how the demand for new dwellings translates into a permanent population. A significant proportion of new dwellings in coastal Alexandrina continue to be used as holiday or second homes and this needs to be considered when making assumptions about future vacancy rates. Furthermore, this is where the role and function of place really shows its spatial variation, because it’s assumed that the coastal strip will continue to operate more as a holiday area, but the northern part, being much closer to Adelaide, will operate more as a peri-urban region. Overall these factors mean that population outcomes in Alexandrina are lower than what might be expected – at 2036 the population is forecast to be 34,324, or around 1.4% on average over 25 years. But if we assumed that the vacancy rate fell by a larger amount, then of course the population growth rate would be much higher as more dwellings would be occupied.

Whether vacancy rates in coastal areas will continue to fall is highly debatable. In general, Census data shows that dwelling vacancy rates declined steadily each Census until 2006, but in many areas they have remained stable since, or even increased. The relationship between owning a holiday home and retiring to it may have been more straightforward in the past, but in the 2010s there are a myriad of retirement living options available, including remaining in their own home. Retirement villages are more common than in the past, and they are located in suburban as well as traditional retirement locations. In additions, there is an increase in the number of Australians retiring to south east Asia where their superannuation is likely to go further due to lower living costs.

Mount Barker – the growth area

Mount Barker is located on the eastern side of the Mount Lofty Ranges, and though strictly not part of the Adelaide urban fabric, it is located just 30km from the CBD. Transport connections into central Adelaide are strong, and this, coupled with significant residential land supply, has resulted in above average population growth. Much of the growth is driven by families and lifestylers seeking a semi-rural environment, but still within reach of the services, entertainment and employment opportunities in the Adelaide metropolitan area.

The household and age profile for Mount Barker is very different to Adelaide and Alexandrina. Almost 30% of the population in 2011 was aged 19 years or less, and just 5.2% 75 years or over. Couples with children comprise almost 35% of households and the average household size in 2011 was 2.58. Mount Barker has significant tracts of land designated as future urban areas, and this will primarily take the form of low density greenfield development – with a significant proportion of housing that is attractive to families.  In other words, it is typical of new suburbs on the fringe of Australian cities. The type of development proposed in Mount Barker is likely to attract family households in the future. This, coupled with vacancy rates under 10%, means that future population growth in Mount Barker is likely to remain strong. In 2011, the population was 30,351, and this is forecast to grow to 52,215 in 2036.

Updates to forecast.id in South Australia

Our forecast clients are aware that we regularly update our forecasts to ensure that the assumptions remain current and that they consider the latest demographic and housing trends. Alexandrina’s forecast was last updated in December 2014, Mount Barker’s in March 2015, and a further update to Adelaide’s forecast is due in July 2015. Keep an eye on .id’s demographic resource centre to see who else has access to .id’s population forecasts. They are a public resource, so you can use them too.