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Why Population Growth Is A Terrible Predictor Of House Price Growth

Proof: Brisbane house prices grew 19% last 10 years. Brisbane had the second highest population growth of any capital city.

Population growth often indicates higher supply NOT higher demand of property.

Population Growth & House Price Growth

Many property professionals, let alone investors, get this round the wrong way.

Those locations in which population growth is impossible are the ones in which supply is the most constrained. These have much better capital growth potential.

The greatest population growth that indicates the possibility of oversupply is the kind that occurs with heavy developer activity.

New housing estates are a classic example. They are also usually the furthest distance from the CBD where land supply is plentiful and infrastructure and amenities threadbare.

But even CBD locations can be tarnished with high developer activity – in the unit market. Just remember that population growth at a micro level, like suburbs, is not an indicator of increasing demand, but increasing supply.

In property investing, and life, use reasoning by ‘first principles’, not analogy and herd mentality.

This is one of the most important lesson you will learn in business, property investing, and life. Keep it in your pocket.

Guys, seriously, don’t make these mistakes. Did you previously think population growth mattered?

PK Gupta
Published: 18 Jun 2021


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