City of SydneyPopulation forecast
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City of Sydney

Drivers of population change

Historical migration flows, City of Sydney, 2006-2011
Historical migration flows, City of Sydney, 2006-2011
'Overseas' refers to arrivals only.

Population and household forecasts, 2011 to 2036, prepared by .id the population experts, December 2016.

Note: The migration flows depicted above are historical and do not represent future or forecast migration flows or subsequent council boundary changes. The arrows represent migration flows to the area as a whole and do not indicate an origin or destination for any specific localities within the area. Overseas flow shows overseas arrivals only, based on answers to the census question “where did the person usually live 5-years ago.

y of Sydney was the location of the first European settlement in Australia. The City of Sydney has developed from colonial settlement to village to town to major world city. The role and function of the City of Sydney has almost turned full circle from its origins as a predominantly residential and commercial area, through a period of depopulation as industry moved in and residents sought housing in areas further out, to its current situation, where significant population increase is occurring through redevelopment of former employment-related uses, such as office space, warehouses, wharves and former industrial and railway land.

The extent of redevelopment proposed over the next ten years will see the City return to population levels unseen since the 1920s. This is expected to occur through massive numbers of new dwellings being constructed, although the average numbers of persons occupying each dwelling will be far lower than in earlier decades.

The massive growth in population is a result of the attraction of the inner suburbs of Sydney for tertiary education, employment opportunities and the 'bright lights', which results in much of the population migrating to the City being young adults in their late teens and twenties. The City of Sydney plays a unique housing role in the metropolitan context. It attracts a large number of overseas migrants. These migrants are primarily made up of students studying at the University of Sydney, University of Technology Sydney and other educational institutions in the inner area of Sydney. The City also attracts a number of permanent overseas migrants, many of whom settle in areas in the Citys south.

The City also attracts large numbers of migrants from regional New South Wales and interstate, the bulk of these being young people studying or moving to Sydney for lifestyle and/or employment reasons. The City of Sydney is the most familiar part of the metropolitan area for those not from the metropolitan area and is therefore attractive to migrants not only from regional New South Wales but also from interstate. The eastern suburbs of Sydney also provide a net flow of migrants to the City of Sydney. This may be the result of greater affordability in the southern suburbs of the City of Sydney.The major driver of population change in the City of Sydney over the forecast period is the very large number of new dwellings that are expected to be constructed. Green Square, which began development in the late 1990s, is expected to have the largest amount of development with the construction of over 18,000 apartments during the forecast period. CBD & Harbour is also expected to experience large amounts of development with almost 7,000 dwellings expected over the forecast period.

Many other areas (eg King Street small area, Chinatown & CBD South small area, Redfern Street small area) are also expected to have significant levels of development.

The built form that is expected with these developments is likely to shape the population. The majority of new dwellings that are expected to be built over the 2011-2031 period are apartments, many of which are relatively small in nature (one and two bedroom). The apartment market has been dominated by young singles, couples and students.

There are a number of key markets that are being targeted by developers. 1-bedroom apartments are mainly aimed at the student market and owned by investors.  A number of developments have between 50% to 75% students (majority overseas), most of which is owned by investors. These sorts of developments are more likely to have younger university-aged populations.

2 and 3 bedroom apartments are aimed at young urban professionals with some investor elements, a part of which is emerging empty nesters and empty nesters providing accommodation for their children while at university. These developments are more focussed on comparatively high double-income households. Most apartment developments have penthouse components (1%), where dwellings can be well in excess of $1 million. This market is not easily identified, although corporate apartments may form a significant share of this market.

As a result of these different tenure relations, it is common to have a wide variety of vacancy rates across the City of Sydney. Areas with a large supply of dwellings are more likely to have a high vacancy rate due to the considerable stock being introduced into the market. This is heightened in areas, where the majority of residents are renters and further exaggerated where there are many corporate apartments, temporary stay accommodation and non-permanent residences.

There is significant potential volatility in the housing market of the City of Sydney over the next fifteen years due its  dependence on a number of factors. These include:

  • The investor market - which in turn is reliant on a constant source of tenants (notably tertiary students), a stable interest rate environment, consideration of price points and continued support from financial institutions
  • Developer profit and willingness to continue residential construction highly capital intensive nature of developments means that developers are dependent on financial institutions for support and the balance between investment returns in residential versus commercial developments may create better opportunities in other sectors  
  • International exposure including a change in international investor sentiment or a slow down in growth of the tertiary student market, which might occur due to changes in the exchange rate or more competitive costs from other cities in Australia, such as Melbourne or Brisbane
  • Policy shifts which might make development easier or more difficult including taxation, planning regulations, developer contributions to infrastructure services and facilities
  • Flexibility of development ability to be able to change the mix of residential and commercial space to cater for differing market conditions.

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