ANZ Research normally thinks about drivers of growth such as commodities, services exports and construction, but population growth has been particularly strong for a number of years and is a driver of growth not bound to a particular industry.
However, we haven't turned this into a relationship where strong population growth and strong employment growth and strong economic growth are all occurring together.
A stark outcome of this population growth is the backlog which has emerged in housing. Population growth has changed over time and from the late 1990s onwards not enough has been done in housing to absorb the population increase.
To meet housing demands, there needs to be an increase in the density of housing supply.
So although there has been a massive upswing in construction recently, all that is doing is meeting the additional inflow of population growth. It's not doing much to address the underlying shortage which has built up over the past 15 years.
In Victoria, ANZ Research estimated from the 2016 Census there was a shortage of around 50,000 houses. This is an important problem and directly impacts housing affordability.
As a result of this shortage, younger people are finding it more and more difficult to get into the housing market and start their own household. So the average household formation age has continued to rise and a lot of it comes back to the worsening affordability.