RPData on population

RPData produce a weekly report about the housing market. Their latest offerring  has some very interesting data on Australia’s population growth. I do not totally agree with their conclusions from the data but that doesn’t change its usefulness.

Australia’s population growth slowing as migrant numbers fade

With cuts to the migration intake, Australia’s annual rate of population growth is the lowest recorded since 2006. At the same time serious labour shortages are becoming apparent within Australia’s key economic driver: the resources sector.

The most recent demographic data released by the Australian Bureau of Statistics (ABS) for September 2010 shows that nationally, population growth is slowing, largely fuelled by a slowdown in net overseas migration.

 

Over the 12 months to September 2010, Australia’s population increased by 345,500 persons. In numerical terms, population growth was at its lowest level since the 12 months to December 2006 when Australia’s population increased by almost 330,000 persons over the year.

On an annual basis between September 1981 and September 2010, Australia’s population has increased by almost 252,000 persons annually. Given this and despite the slowdown in migrant numbers, the current rate of population growth is still 37% above the long-term average however, it has clearly slowed markedly in recent times.

Across the states, New South Wales has recorded the greatest increase in population over the past year in raw number terms (95,157). Interestingly, population growth in New South Wales, Victoria and Queensland combined has accounted for almost 78% of growth over the past year.

In percentage terms, Western Australia has been the fastest growing state over the year with the population increasing by 2.1%. Growth in Queensland (1.9%) and the Australian Capital Territory (1.7%) was also quite strong.

As previously mentioned, the rate of population growth over the year to September 2010 was the slowest in almost four years. The rapidly deteriorating rate of population growth is due to the decline in net overseas migration.

Over the past year, net overseas migration was recorded at almost 186,000 persons, well down from the recent peak of more than 315,000 persons over the year to December 2008. Despite the falling rate of migration it remains well above (54%) the long-term average of 120,000 persons annually.

The other component of population growth, natural increase (simply births minus deaths) remains strong. During the year, almost 160,000 more children were born than persons passed which is just shy of recent highs. Natural increase has accounted for 46.2% of the country’s population growth over the last year which was its largest proportion since June 2005 (46.6%). The rate of natural increase is currently 24% higher than the long-term average.

The Federal Government’s current target for migration during the 2010-11 financial year is 168,700 persons according to the Department of Immigration and Citizenship. This indicates that migration levels are likely to remain at fairly similar levels to that which have been recorded over the past two financial years. Importantly, net overseas migration also takes into account Australian national’s who have left Australia long-term returning and Australian citizens that leave Australia whereas migration targets do not include expats that return home. It is important to also note that New Zealander’s are not included in the migration statistics and are virtually free to come and go as they please. During 2009-10, the greatest number of migrants were coming from: United Kingdom (25,738), China (24,768) and India (23,164).

The ABS publishes statistics which highlight the differential between permanent and long-term arrivals and departures to Australia. The data is represented on an annual basis and highlights that permanent and long-term arrivals are trending lower (as suggested by net migration numbers) and permanent and long-term departures are climbing. The net result of these conditions given that the data is more timely, is that we would expect that net migration will continue to fall over the coming quarters.

Given the ongoing softening of population growth and the fact that Australian consumers are continuing to save despite the fact that the unemployment rate is low (5%) and wages are growing at a rate faster than inflation, we expect that pressure will start to mount from businesses to increase our migration intake. Not only to fill skills shortages but also to support those baby boomers approaching retirement age that have not received superannuation contributions throughout their entire working life.

These retirees will in some form or another rely on Government pensions which are funded by taxes.

The implications of a population which continues to grow is increasing demand for affordable housing and infrastructure such as: public transport, roads, schools, shopping centres and hospitals. Surely the Federal, State and Local Government’s need to start taking appropriate action to support a growing population. Although a Federal Population Minister has been appointed, to date there has been little action.

I have a couple of comments about this.

I am still yet to be convinced that wages are growing at a faster rate than inflation in an aggregate sense. The latest income tax data from the ATO, although a little old, suggests that average wages are nothing like what I have seen some quoting and I am also well aware that inflation figures and reality are somewhat seperated from each other.  Another interesting thing to note is a comparison of annual population growth and annual dwelling starts.

It seems that Qld and NSW are lagging the other states in terms of growth of dwelling builds per person, while Victoria seems to be expecting a population boom shortly. There is a very strong downward trend in the overseas migration data and although I am aware government policy plays its part here the number of permanent departures seems to be increasing rapidly. I have heard many people, including Oz citizens, talk recently that Australia is simply too expensive and they are thinking of leaving to find a better life overseas. With the AUD so high this may be a good time for a stampede towards the exits.

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Comments

  1. “It seems that Qld and NSW are lagging the other states in terms of growth of dwelling builds per person”

    Yeah, not enough empty units and vacant blocks North of the Tweed. We need more.

  2. There’s a couple of Gold Stripes ,
    Housing prices and Migration growth ,
    Only patriotic to base a bit of Green..
    When,raced ahead.so far…

    Nice Ed..cheers JR

  3. You wonder why the Aussies move OS. Here is one example, 6 – 7 million Thai baht (6M baht is today around 190K AUD) will give you the following:

    In Jomtien or Pattaya a very nice condo on the ocean 2 beds pool balcony view of ocean , gym, 150sq meters living space can be purchased for 5 or 6 million baht , 1 mile away from the sea 2 or 3 million for the same type of property.

    190K in Australia will give you this little gem in the Fortitude Valley here in Brisbane:

    http://www.domain.com.au/Property/For-Sale/Apartment/QLD/Fortitude-Valley/?adid=2008416884

    I rest my case.

    • LOL
      Studio : 37m2 Total Area.
      Thats about 5.5m x 6m. Thats smaller than of a avg size lounge room.

      • Sry hit the post button a little quick.
        That should have been

        Thats about 6.2m x 6m. Thats smaller than the average size lounge room and at $5108 sqm, its a bargain….. NOT

    • I thought you have to be a citizen to buy property in thailand, if not for 80k for a 2 bedder near ocean sound good 2 me.

  4. Have RP Data folks suddenly become expert demographers now? Oh, I can see they are experts in predicting labor shortages and wage growth too.
    .
    RP Data would do well to stick to bean counting, giving out fake auction clearance rates and their demonic house price index.
    .
    Leave the rest of it to the real demograhers and real industry experts.

  5. Does anyone have a breakdown of wage rises by sector?

    I suspect the “skills shortage” is restricted to the resources sector which is a tiny employer and hardly likely to drive broader wages spiral. Construction is very weak outside mining, so no skills shortage there either.

    Recent employment figures show most new jobs being created in health and welfare, while other big employers such as manufacturing are in full recession.

    If the miners can’t find workers domestically (surely there are thousands of under-employed tradies ATM?) then how about we introduce temporary work visas for sponsored workers, with a rapid approval process? Then when the boom turns to bust we’re not left supporting thousands of unemployed mine workers in (what will be) a very weak economy.

    When will Australia (and the world) learn you can’t solve economic problems through population growth?

    • I went on holiday to France in early March.

      When I came back, I notice the houses across the road was vacated. A bricklayer used to live there.

      A sign was on the window saying it has been repossessed by the mortgagee.

      It seems business was quiet for him, and not really a trade transferable to the mines.

      I feel sorry for the guy, I’ve got over $100k saved up to buy a house for the right price.

      A potential home builder even, so this bloke could go back to work. But alas, a sacrificial lamb to the banks and real estate agents in their futile attempt to keep prices high.

    • “how about we introduce temporary work visas for sponsored workers, with a rapid approval process?”

      That’s more or less how it works now. I work in the migration industry – temporary work visa approvals (if you know what you’re doing) usually take about 2 – 3 weeks to be approved.

      It’s important to note that the data is for ‘permanent and _long term_ arrivals’ (emphasis added). I’m not 100% sure about how this is measured, but I strongly suspect that the way it is counted is those who tick the ‘migrating permanently’ box on their passenger arrival card.

      Note that even thought you tick the box (so to speak), it doesn’t mean you’ll get a permanent residence outcome.

      As I posted elsewhere, the huge jump in NOM 05-09 can be mainly attribued to the student visa and 457 visa (temporary worker) programs over the period in question – both of which are temporary visas. The downturn in NOM can be directly linked to the falls in both program categories – about 20% yoy since 08.

      At the expense of employing a little snark – going back to my theory about where ABS is getting the data from, simply ticking “I’m here to migrate” on your incoming pax card doesn’t mean you’ll end up with PR – which the majority of international students are now finding out the hard way.

      Again, at the expense of re-stating what I’ve posted elsewhere, I believe that immigration is the factor that will tip housing over in places like Melbourne – and one that has hitherto escaped the notice of the bulls, who seem to be operating (immigration wise) as if it is still 2008. It’s not.

  6. I don’t doubt that there are skills shortages in some specific industries, because there always are. However, since mining employs less than 2% of the workforce, and any shortage will be a fraction of that, importing people to fill the gap isn’t going to make a big difference to inward migration. (Never mind the fact that the rest of WA has been in recession for 6 months.)

    Personally I think that the huge rush of immigration around 2008-2009 was a deliberate government tactic to shore up the economy. If the population grows by 2%, GDP grows by about 2%. They’re winding it down now because it’s no longer needed.

    • I have a slightly different view on this (the high levels of migration in the period in question).

      The Howard government introduced the whole ‘study hairdressing / cookery to get PR’ thing in around ’03. At the time I think it was a fairly effective policy to bring in large numbers of semi-skilled migrants(at a time when Australia frankly did need them).

      The problem is that the GFC hit while the floodgates were still open, and the repeal of workchoices meant that the incoming Labor govts priorities were elsewhere vis a vis the labour market, hence large scale migration reform didn’t happen until mid last year.

      I’ve been in immigration for a while, and I can tell you than getting anything done that involves legislative reform takes a long time to put together.

      As an example, reforms to the 457 (temporary worker) program which were first mooted in April 2008 didn’t come into effect until September 2009 – and that was a ‘fast tracked’ process due to acknowledged wide scale abuse of the visa!

  7. You have to also bear in mind that migrants since 2009 have had to deal with the ridiculous strength of the AUD. There is every chance they will also have found their assets (particularly UK + US) have devalued locally too.

    I have (skilled) friends and family in the UK who have decided not to migrate due to cost of living here and the high AUD.

    Many recent migrants (including ourselves) have found their fortunes severely challenged by these factors.

  8. The only skills shortage I know of are the lack of auctioneers in the RE market to keep up with the surge in properties going to market.

    • Even then, thats hardly what I would call a skill…..

      Maybe professional bullshit-artists is a better way of describing them.

  9. A couple of years ago the Government changed the overseas taxation laws. When someone moves overseas for work and return within two years, they have to pay the difference of their marginal tax rate between the country they were working in and Australia. Because of some of the excellent tax rates in Asia and the Middle East, this is going to push a lot more skilled workers to migrate on a more permanent basis. That’s what it’s going to do with me.

    • Might need to check those details. I think it all comes down to your Principle Place of Residence and residency test. If U leave and set up a home in another country, U dont pay Aussie tax.
      http://www.ato.gov.au/taxprofessionals/content.aspx?doc=/content/64144.htm

      If U are a Aussie resident under ATO rules, then yes U would pay, but then there are some double taxation offsets on the foreign tax U have paid.

      It all comes down to working overseas and ‘Moving’ oversea’s. If U move, your PPR usually moves as well. I know for my wife who worked in US for 2 years, she only did US tax returns, and then filed her Aussie return when our PPR moved back to AU and earned AU income.