ABS population forecasts a waste of time

Posted on 29/11/2013  
ABS population forecasts a waste of time

The Australian Bureau of Statistics went to a lot of trouble this week to tell us what they think the population will be in 2075. If you’re bored enough to be interested, they think the national population will double by then.

And as I scanned all the breathless coverage from press-release-recycling journalists, I wondered: why did they bother?

What is the point is speculating about the population 62 years from now? Does anyone give a hoot? Many of us won’t even be around to check the accuracy of the forecasts.

What chance that the ABS boffins will be even remotely close to right about this? They’re unable to accurately estimate the population from one year to the next - and have to make adjustments to their guesstimates every five years when the Census reveals the true figures.

Given that a big portion of the projected growth is based on speculation about migrant numbers, do the ABS people really think they know the direction of Federal Government policy in 2020, or 2030 or 2050?

Do their crystal balls tell them about medical advances 40 years from now, which might impact on life expectancy? Have they considered that social attitudes about starting a family might undergo major shifts between now and 2075.

Western Australia media got quite excited because this pointless piece of daydreaming concluded that Perth will be bigger than Brisbane in 2028. Why would they bother reporting this fantasy? A lot can change in 15 years.

Anyone thinking of basing a business plan or an investment decision on this kind of thought-bubbling should be aware that you don’t get your money back if the forecast is wrong.

Consider this: in the early 1970s, it was projected by Federal Government bean-counters that the population of Albury-Wodonga would be 300,000 by now. It’s actually 86,000 today. Oops.

The politicians and public servants who made those brave predictions 40 years ago didn’t take into account that a future change of government would result in the scrapping of the social engineering plans of the Whitlam years.

Yet the ABS forecasters today are confident enough in their abilities to state that the Tasmanian population will start declining exactly 34 years from now.

The whole exercise is a waste of time and public money. We know from experience that economists and bureaucrats cannot accurately predict what will happen next year, much less half a century from now.

Population growth is, of course, an issue of consideration for property investors. I do believe, however, that it is over-rated in its importance.

Some “clubs” which claim to do lots of research to serve their investor members have a simplistic follow-the-population-growth philosophy. Buy real estate where high population growth means high demand for dwellings.

The flaw in this flimsy theory is that they have considered demand but forgotten supply.

Experience shows us that high population growth can be the worst thing to happen to a property market. Developers pile in and invariably build too much new supply. We’ve seen that happen repeatedly in Gold Coast City and also recently in the Wyndham City area of Melbourne, which has challenged the Gold Coast as the national population growth leader, and in Gladstone in Queensland, where dwelling demand created by massive gas plants has been suffocated by an excess of new supply.

Around 2005 and 2006, property investors flocked to buy in Mandurah south of Perth because that region was one of the nation’s population growth stars. Most of them would regret their purchases as too much supply and an evaporation of demand led to 5-6 years of price decline.

Steady growth in resident numbers is a good thing for property markets. Runaway growth can stifle prospects for increases in values. 

« Back