November 26, 2023

NSW, Victoria to grow by a million more people over a decade, adding to housing challenge

By Lisa Visentin
November 26, 2023 — 12.01am
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New South Wales and Victoria will need to find room for more than one million extra residents within the next decade, underscoring the growing challenge confronting governments in providing affordable housing, infrastructure and essential services.

Sydney and Melbourne will bear the brunt of the population growth, expanding by an extra 772,000 people and almost 950,000 people respectively by 2032, based on mid-range population growth estimates released by the Australian Bureau of Statistics this week.

The data projections, released every five years, will fuel the ongoing political debate about the size of the population and pressure on the housing market amid a record surge in overseas migration, as the federal government prepares to unveil its long-awaited migration strategy in the coming weeks.

NSW and Victoria will need to accommodate more than one million extra people over the next decade.Credit: Paul Rovere

Melbourne, which currently has just over 5 million people, is projected to pass Sydney as the country’s largest city at some point in the 2030s. Sydney currently has 5.3 million people, on par with international cities like Barcelona and St Petersburg, but far smaller than Tokyo, New York, and London.

Over the coming decade, Victoria’s population of 6.6 million is projected to grow to about 7.8 million, while NSW is forecast to gain an additional 1.1 million people to reach 9.3 million – with the majority of the growth driven by net overseas migration as the fertility rate dwindles.

It comes as state premiers lobby for more influence on the country’s migration intake, and as NSW Premier Chris Minns and Victoria Premier Jacinta Allan joined a state-led backlash to federal Labor’s plans to level $11 billion in cuts to infrastructure plans across the country, and move to a 50-50 funding model for future major projects.

KPMG urban economist Terry Rawnsley said the population projections signalled the need for a major step-change in the planning for Sydney and Melbourne’s growth, as their populations surpassed six million over the coming decade, exacerbating existing pressures on housing, transport, hospitals and other essential services.

“Over the last two years, we’ve seen a big catch-up on international migration, while at the same time we’ve had a slowdown in housing [construction] as a result of COVID. So a whole range of factors have left us in this very tight housing market with vacancy rates below one per cent, which is unprecedented,” Rawnsley said.


He said while there was plenty of policy activity occurring at the federal and state levels to try and tackle housing shortfalls, it would take years for any measures to flow through the planning systems and result in more homes being built.

Demographer Dr Liz Allen, from the Australian National University, said Australia’s housing affordability problem had been decades in making, warning that immigration was becoming a scapegoat for policy failure.

“The reality in Australia is that if we look at state and territory action – or perhaps inaction – and then federal policies concerning housing, we see decades of woeful decision-making and failure to invest in a growing Australia,” Allen said.

“We have many challenges stemming from a structurally ageing population. Without immigration, we would not have the sufficient workforce to achieve fundamental economic functions,” she said.

Reserve Bank governor Michelle Bullock this week said immigration was a “good thing” for Australia and was not adding inflationary pressures, as she predicted that the current peak would return to normal levels.

“Obviously, there is contention for housing and things in the government has got to think about. But the concept of immigration in and of itself, ultimately is good, if it’s run well,” she said.

In response to a growing housing crisis, Prime Minister Anthony Albanese earlier this year secured national cabinet backing for his target for 1.2 million homes to be built across the country over five years, promising $3 billion in federal incentives for states and territories that help meet the higher goal.


Separately, the Victorian government in September announced a plan to build 800,000 homes over the next 10 years, but construction experts and economists have suggested the state’s builder workforce is too small to meet the ambitious target. Meanwhile, NSW this week moved to abolish its independent planning commission in a bid to overhaul low housing targets recommended for some parts of the city.

Home Affairs Minister Clare O’Neil has signalled the government will overhaul the country’s “broken” migration system when it releases its response to a major review led by former public service boss Martin Parkinson. In the interim, the opposition has seized on the record migration intake, which is on track to reach almost 500,000 a year, accusing the government of pursuing a “Big Australia” agenda.

But the ABS data shows that the country’s projected population figures are below those forecast five years ago, when in 2017 the agency estimated that Australia would hit 30.6 million people by 2032 and 42.6 million by 2066.

The latest update forecasts a slightly lower estimate of 29.9 million people by 2032, and 38.2 million by 2066 – more than 4 million smaller than the 2017 forecasts.

Lisa Visentin is the federal political correspondent for The Sun-Herald and The Sunday Age.Connect via Twitter.


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