Census 2016 – What does it tell us?

The Census gives us an in-depth look at the population profile from many angles – age, ethnicity, religion, household/family structure, education, travel/commuting, employment, income, and dwelling type and occupancy – and at many geographic levels, from national down to sub-local government areas. It’s a great resource for decision-making by policymakers and businesses. For those in the business of understanding more particularly how the built environment is changing and how people are responding, in this note Macroplan illustrates what (in theory) the Census can tell us about the Greater Newcastle (GN) area. The October release will have a whole raft of data which will  allow a much more in-depth look.

Greater Newcastle has Fastest Growth in Post-1991 Period.

The Census tells us that the population in the GN area – the five Local Government areas in the lower Hunter- grew by 1.3% per annum in 2011-16. (Table 1) This compares with growth in the preceding period 1991-2011 when it averaged just under 1% per annum. The growth rate is below the NSW rate of 1.6% which is dominated by Sydney’s growth of 1.9%. That is a big gap.  Does it mean GN is under-performing? Not in my view, anyway. It highlights the volatility in Sydney’s growth, with the high growth in this period and in 1991-96 (2.4%) contrasting with the low 0.6% growth in 2001-06. The answer to the 2001-06 low is, almost certainly, a reaction to the surge in prices which peaked in the first half of that period, triggering an out-migration out of Sydney. At the time, Newcastle was just emerging from the closure of the BHP Steelworks. But painful though it was, that is now ancient history. The jump in GN’s growth rate reflects net in-migration, with Sydney a major source and  looking ahead, the next Census is likely to show a bigger net migration factor as people and businesses respond to Sydney’s high prices.

Table 1: Population Growth – Greater Newcastle 5 LGAs (GN)  

    1991  1996 2001 2006 2011 2016
Australia No.’million 16.78 17.69 18.71 19.86 21.51 23.40
CAGR (%) 0.92 1.13 1.19 1.61 1.70
NSW No.’million 5.9 6.2 6.5 6.5 6.9 7.5
CAGR (%) 0.92 1.12 0.06 1.10 1.58
Sydney No.’million 3.3 3.7 4.0 4.1 4.4 4.8
CAGR (%) 2.43 1.33 0.60 1.29 1.90
Greater Newcastle No.’000 428 450 471 493 521 555
CAGR (%) 0.87 0.91 0.95 1.08 1.29

The Newcastle economy has been doing well for a long time now, a reality that will be confirmed when the Census labour market numbers are revealed in October. In the period 2011-16, if the ABS “estimates” are right, employment will have grown over 2%, well ahead of growth in the working age population (15-64) which grew 1.1%, with the unemployment rate likely dropping from over 7% (in 2006) to about 5.25%.  If confirmed, this would continue the dramatic improvement already observed from 2001 when GN’s unemployment rate of 10% was well above the NSW average then of 7%.

And behind that story is the fact that this has happened despite a probable significant further contraction in employment in manufacturing from over 11% in 2011 to closer to 7% in 2016.  In 1961, manufacturing accounted for 36% of GN’s employment (30% for Australia). If the decline had been predicted in 1961, it would have been doom and gloom for GN. But the jobs have come and, while coal mining has helped, Newcastle has grown into a service based economy.

An Ageing Population a Problem?

The Census data has confirmed that the population in GN is older than the national/state average and that the retiree cohorts are the fastest growing age groups (Table 2). Curiously, the numbers have the 75-84 age cohort growing slower than the 65-74 age group but that must change as the recent retirees come through, but there is no mistaking the fast growth in the 85+ age group which drives demand for aged care services.

Table 2: Changing Population Profile – GN  

Age Cohort 2001 % 2006 % 2011 % 2016 % CAGR (%)*
0-14 years 98.2 20.9 97.0 19.7 98.8 19.0 103.1 18.6 0.33
15-64 years 302.8 64.3 319.5 64.8 335.8 64.5 350.6 63.2 0.98
65-74 years 36.8 7.8 38.7 7.8 45.1 8.7 56.7 10.2 2.92
75-84 years 25.4 5.4 28.9 5.8 28.9 5.6 30.9 5.6 1.32
85 years + 7.5 1.6 9.4 1.9 12.0 2.3 13.8 2.5 4.20
Total 470.6 100.0 493.5 100.0 520.7 100.0 555.2 100.0 1.11

From an Australian perspective, the ageing of the population and the rise in the dependant/worker ratio is a fiscal problem for State and Federal Governments and for taxpayers. But from a purely local perspective, the income that will be transferred from the national coffers means that this is a demand story for GN. Indeed, part of the aging story is that retirees are moving to regional areas. And they are moving because the cost of living in the big cities is encouraging them to move.

The downside of moving to remote regional areas where housing costs are cheaper again, is access to good health facilities which of course matters for retirees. But GN has high quality hospital and medical services. And it is the demand for these services which this retiree cohort generates (paid for by Sydney taxpayers), which will boost the GN economy.

Of course, retirees are consumers of a whole range of other goods and services, so the boost is not just to health but much broader. And, the ageing population will imply a lift in demand for residential aged care facilities – data on the growth in this aspect of the market will out in October.

Education Boom No More?

The flipside to the ageing populations is the relative decline in the younger age cohorts (5-14:  and 15-24) means a relative decline in demand for education, but (note) there was still an absolute rise in these age groups. What the Census data tells us is that the surge in participation by the 15-24 age in the period 2006-2011 from the open slather on entry has petered out. The return from education has also declined and this is making students re-assess their investment in education. For regional universities such as University of Newcastle (UoN), which are mostly focussed on domestic students, the market is now more competitive. UoN has made a significant investment in a new CBD based campus for its business and law students which should make it more competitive in attracting domestic and international students.

Table 3: Dwelling – GN 5 LGAs   

  Detached Medium Density Units Other Total % pa
2006 No.’000 158.8 14.7 15.0 2.6 191.0
  % share 83.14 7.68 7.83 1.4
2011 No.’000 166.0 17.9 16.0 2.3 202.2 1.15
  % share 82.09 8.87 7.89 1.1
2016 No.’000 172.4 25.2 13.4 3.4 214.4 1.17
  % share 80.43 11.74 6.24 1.6

GN Not Yet interested in Medium Density?

The Sydney market has always been the densest housing market in the country and the shift towards more medium and higher density housing is clear in the 2011-16 data. The driver of this is the size of the Sydney market, its economic geography and high concentration of employment in the CBD, which underpin the high location premiums in that inner market and the market demand for medium and high-density dwellings.

By contrast, the GN market is smaller, has a dispersed employment structure and, while the coastal suburbs attract a location premium, there is simply nothing like the same pressure for higher density, although clearly retirees will have some preference for medium density. So, when we look at the data we do see a decline in the share of detached houses in the mix, from 83% in 2006 to 82% in 2011 and now 80%. Then we have the really curious “result,” that units declined in absolute terms by 2,600 while medium density surged. The footnotes do not tell us but clearly that there may have been a re-classification of units to medium density.  A query will be going into the ABS on that one.

If we look a little deeper (down to SA2 Level) however, we do see a noticeable increase in medium and high-density housing in the high amenity Cooks Hill area (Table 4). There, the number of detached houses has declined in absolute terms and is now just 12% of the stock, replaced by medium density and units. This area does carry a premium and with the “gentrification” of inner Newcastle, this pressure for density in this part of the market is compelling.

Table 4: Dwelling – Cooks Hill - Newcastle   

  Detached Medium Density Units Other Total % pa
2006 No. 989 1073 2634 61 4750
  % share 20.82 22.59 55.45 1.28
2011 No. 921 1254 2829 50 5064 1.29
  % share 18.19 24.76 55.86 0.99
2016 No. 685 1404 3167 66 5323 1.00
  % share 12.87 26.38 59.50 1.24

Footnote: Caution and Expect Some Revisions to History

A few of the numbers looked curious, to say the least. That is, do not always take this data on face value.

Finally, the Census is the benchmark the ABS uses for a large number of its statistics, so it will see some current estimates revised. For example, before the Census, population growth estimates were based on the 2011 Census with some assumptions built into subsequent estimates, particularly for small area estimates. These numbers will be revised. So, it will give us a truer picture of the period 2001-16 and a new (better) benchmark for post-2016 data.

This spotlight on Greater Newcastle is a high level example of a precinct analysis that Macroplan can deliver. For more information on the Census or to request another precinct case study, contact Amy Williams, National Marketing Manager on 02 9221 5211 or amy.williams@macroplan.com.au.

About the author: 

Dr Nigel Stapledon Chief Advisor

Nigel has a PhD in Economics from UNSW and a Bachelor of Economics with Honours from the University of Adelaide. He started his career in Canberra, where he worked in the Commonwealth Treasury, following this he worked at Westpac where he was Chief Economist. Nigel has been at UNSW Business School since 2003 where he completed a PhD on the long-run history of house prices in Australia. Nigel is a regular commentator in the media on macro-economics and housing., contact Nigel on 02 9221 5211 or nigel.stapledon@macroplan.com.au