Population growth has normalised

Yesterday’s Daily Telegraph contained an interesting article on the increasing number of Australians departing Australia permanently:

OVERALL migration from Australia has soared to a record high – with 88,000 leaving in the past year, almost half from NSW.

The stampede abroad is a 90 per cent increase 10 years ago, figures from the Department of Immigration show.

Half the emigrants are Australian-born who have chosen to start new lives in Britain (15,119), New Zealand, (14,596), the US (8046 and Singapore (6952)…

At the same time, the number of people emigrating to Australia has dropped, by 9 per cent to 127,458 in the past year, making the ratio of departures to arrivals a record high…

Upon reading this article, I decided to crunch the numbers to determine how Australia’s migration numbers are tracking. The below chart shows the permanent arrivals vs permanent departures numbers alluded to in the above article. The ratio of arrivals to departures is also shown:

As you can see, the number of net permanent arrivals into Australia – around 45,000 for the 12 months to September 2011 – is well below the long-run average (around 65,000). The ratio of arrivals to departures is also in long-term decline and currently sits at a 35-year low of 1.5 times.

However, the broader net overseas migration (NOM) statistics published by the Australian Bureau of Statistics, which measures in/out migration of anyone residing/leaving Australia for a period of 12 months or more (rather than permanently), paints a different picture.

According to these statistics, NOM is still above long-term trends, but has declined sharply from the peak level seen in the year to September 2008, from around 315,000 to 170,000:

With the decline in NOM, Australia’s population growth has also fallen significantly, from a peak of just under 470,000 in the year to September 2008 to just under 320,000. The share of population growth coming from immigration has also fallen over the same period from a peak of 67% to 54%.

Finally, in percentage terms, it appears that Australia’s population growth and immigration are returning to average levels after surging in the 3 years to 2008:

With the ABS scheduled to release the June quarter NOM data in mid-December, it will be interesting to see whether Australia’s NOM mirrors the permanent arrivals/departures figures and registers another fall.

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Leith van Onselen

Comments

  1. Was the surge in NOM simply a lot of students and ex- pats retreating home during the GFC?

    Or was there actually a surge in the number of people being accepted for migration? Family reunion, skills, refugees etc?

    People often speculate that if house prices decline the Fed Govt will just pump up migration.

    To what extent is there any evidence that this has happened or might happen.

    In the absence of a credit boom economy it is seems more likely that rising unemployment would stymie any thought of using migration to prop up house prices.

    The pollies are much more likely to prefer soft house prices than unemployment fuelled by migration.

    It would be interesting to see if the research claiming a net benefit for migration allowed for the credit boom as a key driver main of low-ish unemployment over the last 15 years. In the absence of rapid credit growth rapid migration may not be feasible.

    • In the case of Ireland, population growth declined dramatically when the housing bubble burst. From 2.5% in 2006 (higher than any Australian growth in 35 years) to around 0.5% now.

      Thanks to Google public data explorer – http://bit.ly/rOL1Jq

    • Was the surge in NOM simply a lot of students and ex- pats retreating home during the GFC?

      “Half the emigrants are Australian-born” suggest this isn’t the case.

      • Sorry I wasn’t very clear in that sentence (ipad on moving train is my excuse).

        I was curious as to the cause for the surge in NOM between 2006 and 2009. I recall reading that a lot of ex-pats headed back down under around the time of the GFC as jobs dried up overseas. In addition the end of the Howard government may have been the peak of the overseas student ‘education’ aka ‘cash for residency’ program.

        But possibly they are not the reasons for the surge.

        Those Irish figures are interesting and tends to confirm that rapid population growth may be more about credit booms.

        In that case unless the RBA fires up the credit boom again a return to rapid population growth may be unlikely.

        A relevant factor for housing demand.

        • Sorry, I assumed you were referring to emigration, which is growing now. I think the immigration rise pre-dates the GFC – appears to have peaked in Sep 2008, which is when the GFC proper bit (discounting the rumblings since May 07 with Bear Sterns). That definitely took out a fair whack of the cash-for-residency student migration.

          I migrated back from the UK in early 08, but there was certainly a surge of finance-based workers migrating back in 09 following redundancies. That must have offset a steeper drop in other migration sources, and that is possibly reversing now (after all, what is “permanent”?)

  2. What happens when the economies in the source countries of the migrants recover? Where there is affordable housing, excellent infrastructure and a requirement for skills.

    • That would depend on whether the recovery in the source countries is matched with growth in Australia or not – permanent migration is an expensive proposition, and reversing it would make sense if the relative prospect of staying where you are is a more expensive propostion.

    • That’s what I find strange about the increase in emigration of Australians, 90% in 10 years is astonishing, it’s happening at a time when the Australian economy is relatively strong – not what I would expect. Like you, this makes me wonder what it would be like with a weak Australian economy and good prospects overseas.

      • People selling their home in Australia and moving out now, are wise. Their Australian property is worth well over double what it should be on historic trends.

        It used to be that people emigrating from this part of the world, to Britain, Europe, and California at least, had to really bite the bullet financially to be able to buy in to the expensive property markets there. Not any more. The cashed-up and well-heeled Aussie emigrant is turning into an international phenomenon thanks to the Aussie housing bubble now being the biggest unburst one in the OECD.

        It can’t last forever – inflated property prices are themselves a means of undermining an economy, through numerous mechanisms including debt servicing, reduced household discretionary spending, labour force cost pressures, social injustice, actual cost to businesses of property, diversion of capital from productive investment, reduced efficiency of urban form (contrary to what the boosters of “smart growth” say) etc etc. Britain is the classic illustration of what happens to an economy after too much urban growth containment. Sure, people who have owned property for long enough are rich if they cash up and move to a low land price nation. But everybody else is just a deckchair re-arranger on a sinking ship.

        • Phil, I suspect there is more to it than just that, but without seeing what groups of people make up those numbers it’s hard to say. Sure there could be some Aussies taking advantage of the combined strong dollar and high house prices to move offshore, in the same way some poms were able to buy quite a nice place here when their bubble was in full swing and the pound strong.

          It could also be there are much better opportunities overseas for Australians with skills that are not directly mining related, so they are voting with their feet.

        • “People selling their home in Australia and moving out now, are wise. Their Australian property is worth well over double what it should be on historic trends.”

          Not just that, but our dollar is also ridiculously overvalued at the moment. A great time to sell here and buy overseas if you’re thinking of doing so.

  3. Right PhilBest.

    Two of the key drivers of pop movement IMO – property prices in host/home and exchange rate.

    For Aussies or expats in Aus, right now is (or was) the perfect storm to leave the country if you wanted to. High AUD, high prices here, stagnating prices elsewhere.

    Same works in reverse. Lots of people from the UK who would like to come now wont because house prices here too expensive, AUD too high, UK prop prices flat/falling except London/SE.

    Its almost a natural braking mechanism on Aus property prices in fact.

  4. Finance and economics guru Gary North, who picked the bubble in “the USA” years ahead of time, also picked that it was restricted to certain markets, especially in California. He advised at least one person who took the advice, to sell his home in California and move to a city in Texas where he could buy seven houses with his money, rent out 6 and retire.

    Now is the time for Australians to follow the Gary North proposal, I suggest.

    But I agree with what others have replied to me above – it is too early for this sort of an effect – Australians mostly don’t KNOW they are sitting on top of bubble property. But those with skills that are sought after internationally, will be discovering in increasing numbers when they do their sums, that “hey, I CAN afford to buy into London or Singapore now…..”

  5. How does this spike down effect the ‘Shortage of Housing’ situation? If I recall correctly the magic 200,000 short figure repeated ad nauseum in the MSM is a projection from a few years ago based on a number of assumptions. Surely this rapid change will have a big impact!