Opportunities exist everywhere and it is through times of change that the greatest of fortunes can be made.
The above statement may be particularly relevant to the city of Adelaide. Both future projections and global events would suggest that the city of Adelaide is on the cusp of great change. The following review will look at various factors which could have significant affects on housing demand in the city.
In 2002 the Australian Bureau of Statistics published data suggesting population growth in Adelaide over the years to come would be minimal. In response to this, the state government in 2004 released it’s first ever population policy, Prosperity through people – a population policy for South Australia.
The keys outcomes of this policy are as follow
- South Australian population will reach a 2 million by 2050
- In 2050 the population will continue to grow
- There will be a significant increase in the working-age population to a stable figure of around 1.166 million by 2051
With the new state government population policy in place it is expected that the states economic growth should continue to increase throughout the years to come.
South Australia has a very large aged population and with this it is expected that household structures are to change significantly.
According to the 2 million by 2050 scenario discussed in the Planning Strategy for Metropolitan Adelaide (December 2007) the population distribution in the years 2001, 2026 and 2051 are expected to be as follow.
Accompanying a changing age distribution throughout the state will be change in average household size (average number of persons per household).
The planning strategy for metropolitan Adelaide (December 2007) states “Older people have a higher propensity to live in single person and couple households. The largest increases in household category in the future is expected in the female and male lone person and couple families without children categories, as a consequence of an increasing number of older people. There will also be a substantial increase in demand for aged care facilities. One parent families are also expected to increase. This change will reinforce existing trends, where household growth (number of households) is outstripping population growth. In South Australia, household size is projected to decrease from approximately 2.42 persons per household in 2001 to 2.15 in 2051”. The following figure indicates that according to the 2 million by 2050 scenario it is expected that all the growth in households will be older singles and couples with no children living with them.
These data suggest that based strictly on demographic change alone; there will be a continued demand for housing in South Australia. This is consistent with the planning strategy for metropolitan Adelaide (December 2007) report which stated that “a continuation of the decline in average household size will be a substantial contributor to future housing demand, with consequent land use and planning implications”.
Based on the projections highlighted in the Population and Changing demographics sections, the number of new dwellings required for the state can be predicted. The states population is currently 1,584,500 (ABS 4th December 2007). The total number of dwellings which exist in the state is 679,662. With the expectation that the population will reach 2 million by 2050 this suggests an additional 415,500 residents will enter the state. Based on this addition as well as the current trend which has demonstrated a propensity for fewer people to reside per dwelling over time, it is estimated that approximately 275,000 new dwellings will be required between now and 2050.
Recent population growth
in the state (as of December 2007) has, however, exceeded projections and it has been estimated that if current growth conditions prevail that the target of 2 million people within the state may be reached earlier than 2050.
Following is a recent amendment to the existing urban boundary. Urban Development and Planning Minister Paul Holloway has said that the decision to adopt the new boundary will provide certainty about where Adelaide will grow during the next 15 to 20 years.
Image taken from www.planning.sa.gov.au
Orange shaded areas represent extensions to the urban boundary. It is apparent from the above figure that relative to the existing land area which existed within the previous urban boundary, that only a marginal increase in land availability has occurred. This taken together with the estimated requirement of 275,000 new dwellings within the state suggests that land will be a highly sought after asset and the demand for housing within the state will remain strong for the foreseeable future.
In recent times the city of Perth has been affected by the resource boom which has taken place. Before this boom took place, however, it is interesting to note the similarities which existed in Adelaide and Perth home prices. The following figure illustrates Perth and Adelaide home prices between 1990 and 2006. The figure demonstrates that Perth prices closely tracked those of Adelaide until 2004. From this time onwards the boom took Perth median home prices to record highs. This has provided Perth home owners with significant capital appreciation
and equity which could be used for improved lifestyle or for reinvesting.
South Australia has mines which hold the world’s largest known Uranium deposits as well as the forth largest Copper deposits. Significant deposits of Gold and Silver also exist. There are currently plans underway to expand these mines and increase resource exports. Based on what was observed in Perth, such a plan to expand the mining operations could have a dramatic impact on Adelaide home prices.
Indeed the global desire for Uranium may be increasing. We are living in times where global warming is accepted by many as being a very real phenomenon. And it is also believed that the key contributor to this phenomenon is CO2emissions. Fossil fuel consumption is the most commonly used method for generating power around the world. The burning of fossil fuels produces, nothing short of staggering levels of CO2 emissions annually (See Figure below).
Obtained from: http://maps.grida.no/go/graphic/total_world_co2_emissions_from_coal_gas_and_oil
More and more pressure is being placed on the international communities to reduce CO2 levels and to find alternative power sources. As attractive as power sources such as solar and wind power are, the reality is that their economic efficiency relative to coal generated electricity is very low. Hence much debate currently exists around the world which is exploring nuclear power as a logical alternative for generating power and reducing CO2 emissions.
Such debate places South Australia in an enviable position as it holds the largest deposit of what may be worlds next alternative power source.