Apparently, population growth is now a bad thing if you’re looking for capital growth. What the…?!
There’s an article by Jeremy Shepard on how high population growth leads to low capital growth. Total opposite of what I’ve been doing.
Is this for real? First they tell us fat is bad for us, then they tell us the right kind of fat is actually good for us. Too much opinion, not enough facts.
DSR DATA is the company (dsrdata.com.au). The blog page has the article on it. It’s a long read, but I can see what he is saying and fair enough for some of it. But gees, could’ve told me this before I started investing.
Here’s the link if anyone wants to have a look: https://dsrdata.com.au/blog/2015/2015-04-population-growth-myth
I think he misses the key issue on population growth which is the outlook of our immigration policy. We’ll need to keep our borders open to skilled workers to boost the population so we have enough tax payers to cover welfare costs of our aging population.
Jason Staggers | JasonStaggers.com
http://jasonstaggers.com
Email MeI had to read it twice to even start to agree with the author. But after the re-read, I think I now understand what he is saying.
In essence, be careful which parameters you use in determining potential Capital Growth of an area. Though an area may be “sought after”, one of the common limitations is the number of available properties. e.g. Ascot in Brisbane, Vaucluse in Sydney, etc. And, if properties are not readily available, HOW can the population show Growth?
Seems reasonable to me – NOW !!! ;)
Are Ascot and Vaucluse NOT liable to grow in value because the population is not growing? If still sought after, the “Vacancy Rate” will likely be on the floor – in fact, there may be NO properties to rent in such a suburb!
Of course, his title (“Population Growth is bad for Capital Growth”) was designed to be eye-catching and thought-provoking – he got me !!
One similar statement caught my eye a few years back – designed to shock, and a knee-jerk “That can’t be right” comment. The one I heard was “Why do they put brakes on racing cars – Answer, So they can go FASTER!!” It too was dead right in its observation.
An interesting post – thanks, cland !!
Benny
I get what you’re saying Jason about immigration. It is needed for aging population. That affects the entire country. But I think his blog is more for investors than politicians. At least that’s what I got out of it. We investors can’t use high population growth figures for finding high capital growth. It’s the other way around! Flies in the face of what I’ve been taught for the last 10 years I’ve been investing.
Update: apparently, his blog has been published in the latest issue of Your Investment Magazine. A friend said it is on page 26. So they reckon he is right too. I’ve read it again like Benny and I’m more convinced now.
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