Population Growth

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<div>There was a slight increase in the number of permanent settlers in Australia in the year to June, according to today's ABS figures. </div>
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<div>Most come from Asia, at 58.4 per cent in the year to June.</div>
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<div>Only 410 Brit settlers arrived in the month of June - crashing down from a record 2,560 in August 2007 to the lowest figure in the history of the data series. </div>
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<div>Not so many Kiwis are making the permanent journey across the Tasman either right now.</div>
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<div>With departures up over the past year, net permanent and long term immigration fell quite sharply to +262,800, the lowest figure since March 2007.</div>
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<div>It's another type of casualisation. </div>
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<div>Just as there are more part time jobs these days than there used to be, there are more part time migrants!<br><br>Despite the slowdown, as I explored here the headcount in Australia is probably up by more than 400,000 over the last year, including a surge in international students.</div>
<p><br><strong><span style="text-decoration: underline;">Record visitors</span></strong></p>
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<div>The lower dollar has resulted in an epic boom in short term arrivals, to yet another all-time high of 7.84 million.<br><br>And this figure is accelerating, up by 10 per cent over the past year. </div>
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<div>That said, the downward pressure impact of the lower dollar on short term departures (up to 9.67 million) may be beginning to fade. </div>
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<div>Most short term visitors come for holidays (3.91 million) or to visit friends and relatives (2.04 million).</div>
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<div>No surprises that June saw yet another monthly record in the number of visitors from China and Hong Kong,</div>
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<div>There has been a stunning 21 per cent increase in annual visitors from China, Hong Kong, and Taiwan, to a record 1.54 million (a rip-snorting 13-fold increase from 1991). </div>
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<p><br><span>Meanwhile 469,800 education arrivals in the year to June was 14 per cent higher than one year ago.</span><br><br><a href="/images/2016/08/05/A2.jpg" target="_blank">Click to enlarge</a><br><img src="/images/2016/08/05/A2.jpg" alt=""></p>
<div>Recall that the visa rules for international students were relaxed effective 1 July, so these figures will likely accelerate in the second half of 2016.</div>
<p><strong><span style="text-decoration: underline;">The wrap</span></strong></p>
<div>As you were, really.</div>
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<div>Fewer long term and permanent migrants to Australia - particularly from the United Kingdom and New Zealand - but record short term arrivals and ever more Chinese visitors (with more to come when the changes to student visa rules kick in as the year progresses). </div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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Record Chinese visitors again: Pete Wargent

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<div>The latest population growth figures put an altogether different slant on Australia's assumed apartment gluts. </div>
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<div>In Melbourne, the risks have receded dramatically, at least for now.</div>
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<div>In fact, with the state's estimated populated growth apparently tracking at the highest level in six decades, it would be all but impossible for the market to become 'oversupplied' until this rate of growth in the headcount slows down. </div>
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<div>Now Queensland <strong><span style="text-decoration: underline;">really</span></strong> went on an apartment construction mission from 2014 forth, to the extent that there is a now a clear oversupply of units in some locations, particularly inner city Brisbane, with more supply still to come online. </div>
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<div>The latest figures show that although the glut will have an impact for some time to come, the market will right itself eventually.</div>
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<div>Indeed, the reacceleration of population growth to +75,400 per annum is exactly what Queensland's housing markets needed to help absorb the stock, while new apartment starts are now understandably and visibly slowing to a crawl. </div>
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<div>In Hobart, commencements have yet to pick up dramatically, despite electric growth in house prices and rents.</div>
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<div>Because the Hobart market demands houses and not apartments, in theory the supply response should come much more quickly (apartment projects can take ages to build, comparatively speaking).<br><br>And we know from previous cycles that the market has the potential to deliver much greater supply - but to date it hasn't happened.<br><br>Developers from the mainland are not that keen to get involved, perhaps, given the logistical challenges.<br><br>I haven't been down to Tassie for a while - and I got seasick when I last went - so I have no feel whatsoever for activity on the ground. </div>
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<div><strong><span style="text-decoration: underline;">First homebuyer demand</span></strong></div>
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<div>I noted here previously that the 2016 Census confirmed an enormous surge in 25-34 year olds.</div>
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<div>Due in part to housing affordability challenges, many are not yet forming households, though they might begin to do so if capital city apartment prices do ever slide in any meaningful way.<br><br>
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<div>ANZ research this week suggested that there is significant latent first homebuyer demand, and ANZ believes that this could potentially keep an effective floor under prices, which is what I concluded from the Census figures back in June too.</div>
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<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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Australia's assumed apartment gluts

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<div>Figures out recently showed Australian employment growth <a href="http://petewargent.blogspot.com.au/2018/03/employment-growth-hits-all-time-high" target="_blank">tracking at all-time record levels</a>, with a stunning +420,700 year-on-year increase in employment, including an eye-watering +166,200 increase in New South Wales.<br><br>I took a look through those numbers in a bit more detail, including at the state level, <a href="http://petewargent.blogspot.com.au/2018/03/employment-growth-hits-all-time-high" target="_blank">here</a>.<br><br>Population growth tends to be pro-cyclical, and over the year to September 2017 the annual growth in Australia's estimated resident population picked up to +395,600, for the quickest annual increase since 2013 in absolute terms, if not in percentage terms.<br><br>The estimated rate of population increase through net overseas migration is a bit faster than might be implied by the issuance of permanent residency visas, with the growth international students accounting for some of the difference.<br><br>I'll take a look below through where and why that's happened in 4 short parts.<br><br><strong><span style="text-decoration: underline;">Part 1: By natural causes...</span></strong><br><br>
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<div>As the population grows and ages the number of deaths each year tends to climb steadily, now up to +161,100 over the year to September 2017.<br><br>The trends for births are a bit more complicated, and often vary quite significantly around the regions of Australia and by culture.<br><br>Generally speaking, we're still having babies, but on average we opt to do it later in life than was the case over the preceding decades.<br><br>I'm not a bad case study myself for Australia's population trends, being a capital city immigrant to Sydney that worked in professional services, then mining, then real estate...before relocating to Brisbane, and leaving having children about as late as nature would allow.<br><br>I've yet to get divorced.<br><br>You might say I'm following the herd, but in fact my plan has been to be ahead of the crowd on all fronts, and indeed with the benefit of hindsight I probably got out of the mining industry a few years too soon (bubbles can have a second wind and run for <strong><span style="text-decoration: underline;">much</span></strong> longer than you think they will...but you live and learn with these things!).<br><br>Anyway, back to the demographic statistics, there was previously a bit of a blip in the births figures - the error was administrative and related to slow record-keeping rather than the number of babies actually popping out - but the backlog now seems to be fixed and total births have stabilised at around +306,500.<br><br>Thus, the natural increase in Australia's population over the year to September was +145,500, a bit lower than the +151,500 a year earlier as the number of deaths continued to increase. </div>
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<div>It's hard to predict what will happen here.<br><br>Certainly the number of deaths will continue to rise (that's one prediction you can hold me to) and as the Baby Boomer population ages for the past decade I've consistently recommended some exposure to the healthcare sector for that very reason, while there will be a chronic shortage of aged care facilities and, in some locations, retirement living options.<br><br>Future births I can't reliably predict - nobody can - but by dicing up the population pyramid I do like to construct the argument that the growth in births will be much stronger than many expect, due to immigration being focused on younger arrivals, and the <a href="http://petewargent.blogspot.com.au/2017/06/demographic-tsunami" target="_blank">corresponding explosion</a> in the 25-34 year old cohort.<br><br>The births boom will just come a bit later down the track than previous trends might imply, that's all.<br><br>Unfortunately more divorces and separations will also ultimately result in an unprecedented spike in demand for inner-suburban apartments and townhomes, but that's all a while away yet.<br><br><div class="separator"><a href="https://2.bp.blogspot.com/-3xjJlS6OX_k/WrQc2VK_knI/AAAAAAAApDw/O4n-4-OnTLAs8-hkt1esyNXFoB6WhkV2wCLcBGAs/s1600/Year%2Bof%2BAge.jpg"><img src="https://2.bp.blogspot.com/-3xjJlS6OX_k/WrQc2VK_knI/AAAAAAAApDw/O4n-4-OnTLAs8-hkt1esyNXFoB6WhkV2wCLcBGAs/s640/Year%2Bof%2BAge.jpg" width="640" height="396" data-original-height="835" data-original-width="1348"></a></div>
<br><strong><span style="text-decoration: underline;">Part 2: Immigration nation</span></strong><br><br>
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<div>Australia's permanent migrant intake is capped at around 200,000 per annum, but the overall pace of net overseas migration was faster than this, partly accounted for by international students.<br><br>Furthermore, earlier studies by the ABS have found that many Australians migrating overseas 'permanently' or purportedly for the long term end up returning to these shores within a remarkably short space of time, suggesting that for many the grass is not greener elsewhere.<br><br>Incidentally, <a href="https://www.urban.com.au/expert-insights/investing/43292-boomerang-departures-drive-population-growth-rebound-pete-wargent" target="_blank">I wrote in 2015</a> how these 'boomerang departures' would be one factor leading to a population growth rebound, inadvertently dragging me into a quagmire of social media ridicule (in the end I was right, though).<br><br>Looking at the net figures, then, we can see that net overseas migration increased by +15.4 per cent over the year to +250,100. </div>
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<p> The next slide tells its own story: immigrants still love Sydney and Melbourne, and now in record numbers. </p>
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<div>Concerningly for the regional centres of Australia, the <em>Characteristics of Recent Migrants</em> survey showed that not only do migrants uniformly head to the capital cities, <a href="http://petewargent.blogspot.com.au/2017/06/migrants-flock-to-capital-cities-stay" target="_blank">they also now overwhelmingly remain there</a>. </div>
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<div>I know a bit about this, because I'm one of the said migrants, although like many I've made a couple of internal capital city moves since my first arrival in Australia in the 1990s. </div>
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<div>During the mining boom years through until 2012 immigrants also flocked to the resources states. </div>
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<div>I recall Simon Reeve's BBC documentaries revealing to stunned Britons that expat truck drivers in Western Australia were earning salaries that most working class Poms could only dream of, and to rub further salt into their wounds the truckies were living in houses with swimming pools you could actually swim in! </div>
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<div>Although Queensland has experienced something of a rebound, the drawcard for the resources states is not nearly as strong as it used to be, and South Australia has at least half a foot in that camp too. </div>
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<br>Going forward Sydney, Melbourne and south-east Queensland are projected to capture the bulk of population growth.<br><br>Perth will now have direct flights to Europe in its favour, but my analysis here previously has shown that in the future almost all of the net growth in the overseas born population will be driven by migrants of Asian origin.<br><br>European-born Baby Boomers are set to drop off the perch and more Asian migrants and international students from China and India are dominating the intake (with many expected to become permanent residents later).<br><br>This in turn has a strong impact on future demographic pull-factors, including for family visas and future international students.<br><br><strong><span style="text-decoration: underline;">Part 3: Upping sticks</span></strong><br><br>One of the main trends to watch for me at the moment is internal movements as the two most populous capital cities adjust to the latest influx.<br><br>Sydney in particular can be wearisome at times with the delivery of the CBD &amp; South East Light Rail project still seemingly an age away, although testing on the Randwick section is at least now underway.<br><br>This is scant consolation, I expect, for the commuting residents of Randwick and Coogee currently experiencing near-unfathomable gridlock on their short 6 to 8km journey to the city, only to discover that when then arrive in the city the key CBD thoroughfares are being dug up there too.<br><br>For this reason and others, Queensland has now usurped Victoria as the typical interstate migrant's destination of choice with net inflows hitting a decade high of above +19,000.<br><br>About 12,000 of those came from New South Wales on a net basis, with the ratio of Sydney's house prices to those in Brisbane tracking at the highest level we've ever seen at above 2.2. One way or another that ratio will likely close back below 2. </div>
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<div>Although not included here because it would simply be a long, flat, green line on this Y-axis scale, Tasmania is now attracting more than a smattering of interstate migrants at +1,000 net over the year to September.<br><br>Net interstate migration away from struggling South Australia is not a new thing, and indeed the ABS figures record that well over 100,000 South Australians have relocated elsewhere on a net basis since the early 1980s.<br><br>South Australia now has the slowest population growth of all the states in percentage terms at +0.6 per cent, but it's the composition of demographic change rather than the absolute headcount that should be of most concern.<br><br>The present speed of the outflow is somewhat alarming, especially because interstate migration can have an irritating tendency to sap a capital city of its potential best and brightest.<br><br>Since the peak of the mining boom in late 2012, South Australia has lost more than -23,000 residents interstate, with many skipping in a south-easterly direction to the brighter lights of Melbourne.<br><br>I don't know how that trend gets arrested, but someone needs to have a deep think about it.<br><br><strong><span style="text-decoration: underline;">Part 4: Totting it up</span></strong><br><br>Totting it all up, then, strength in net interstate migration takes Queensland's population growth all the way back up to +81,300, from a cyclical nadir of below +60,000 in 2015.<br><br>Brisbane typically accounts for 60 to 65 per cent of that growth with Queensland being the one Australian state with diverse and thriving regional centres including Gold Coast (which is set to benefit imminently from the 2018 Commonwealth Games) and Caloundra on the Sunshine Coast.<br><br>I looked <a href="http://petewargent.blogspot.com.au/2018/03/queensland-population-to-pass-5-million" target="_blank">in a bit more detail here</a> at where the main population flows are headed in the Sunshine State.<br><br>But even this rate of state population growth growth pales into insignificance next to Victoria (+147,400) and New South Wales (+123,100).  </div>
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<div>A significant <a href="http://petewargent.blogspot.com.au/2017/06/melbourne-population-growth-blows-doors" target="_blank">intercensal difference</a> emerged in the 2016 Census and found that the nadir in population growth in Western Australia was considerably lower than previously believed, partly accounting for the dwelling stock overhang, though population growth is now picking up again and the housing market is rebalancing. </div>
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<div>Western Australia's annual population growth was up to +22,000 or +0.9 per cent.</div>
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<div>Finally, the Northern Territory experienced a small population decline in the September 2017 quarter, which is fairly unusual, though not unheard of. </div>
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<div>I've even lived in Darwin myself, which says something about what a cyclical type of place it can be. </div>
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<div>Through recent episodes of disruption there have been strong correcting factors such a once-in-150 year resources boom or the Cyclone Tracy rebuild to drive the Territory forward. </div>
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<div>I'm not sure what comes next for the NT through the Ichthys/INPEX construction phase wash-up, but then again I haven't been to Darwin for a couple of years and it's the sort of place that likes to deliver surprises. </div>
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<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
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<div>Overall, then, estimated growth in the resident population at +395,600 was comfortably stronger than a year earlier, when it was +370,400.</div>
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<div>Australia's estimated resident population will accordingly pass 25 million within just a few months from today, with Queensland's population projected to surpass 5 million in May. </div>
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<div>After accounting for the concentration of migrants into the capitals Greater Melbourne is growing at about the fastest pace ever.<br><br>Sydney is losing some residents internally to the NSW regions, to the south, north, and west, as Baby Boomers take their new-found housing equity elsewhere for a lifestyle change.</div>
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<div>South-east Queensland population growth will pick up as the <a href="http://petewargent.blogspot.com.au/2018/03/queensland-population-to-pass-5-million" target="_blank">magnetic north</a> does its thing, and in fact it already is as anyone living in inner Brisbane will testify.<br><br><div class="separator"><a href="https://1.bp.blogspot.com/-GdOeqtrS-C8/WrQv9MBrEoI/AAAAAAAApEQ/Kidd_RvjMVUO1dxt1Yr-LpN-Yxtie7F0wCLcBGAs/s1600/QLD.jpg"><img src="https://1.bp.blogspot.com/-GdOeqtrS-C8/WrQv9MBrEoI/AAAAAAAApEQ/Kidd_RvjMVUO1dxt1Yr-LpN-Yxtie7F0wCLcBGAs/s640/QLD.jpg" width="640" height="388" data-original-height="813" data-original-width="1339"></a></div>
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<div>Next I'll get around to posting my mapping population growth versus dwelling completions, which will reveal an interesting outcome or two, especially for Melbourne and Brisbane.</div>
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Immigrants still love Sydney and Melbourne, and now in record numbers

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<div>Like many getting-a-bit-long-in-the-tooth Sydneysiders, I've increasingly been having recurring daydreams about selling a place at Bondi or in the inner west and trading it for a mansion at Maroochydore (or sometime it's a mooring at Mooloolaba). </div>
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<div>Probably about once a fortnight I have these fantasises, on average, I reckon. </div>
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<div>And then reality bites.</div>
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<div>I wake up and find that Infrastructure Australia (IA) has released another report, which always brings me back to earth and reminds me why I invested in inner-Sydney property in the first place. </div>
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<div>As ever, IA's Future Cities report presents a range of scenarios.</div>
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<div>There's a decentralised scenario which incorporates acres of building and hundreds of thousands of new homes in the south-west.</div>
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<div>And then there's a centralised scenario where everyone crams like crazy into zones close to the Central Business District (CBD), and to a lesser extent Parramatta.</div>
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<div>And then there's the medium-density scenario, which is a realistic mixture of the two, incorporating population growth across the city and on balance the most likely outcome. </div>
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<div>The scenarios have one thing in common: none of them envisages a Sydney in 2046 with a population of under 7.34 million. </div>
<p> </p>
<div><img src="https://1.bp.blogspot.com/-PdMnCv6NaPM/WpCTHx3DIuI/AAAAAAAAoic/PKX5PyrObPwoXRjOHlN760TUpD5B47wUwCLcBGAs/s640/A3.jpg" width="640" height="240" data-original-height="500" data-original-width="1324"></div>
<p> </p>
<div>Although people are expected to live all over Sydney, the share of employment will remain heavily skewed to the CBD and city fringe, and to a secondary extent Parramatta. </div>
<p> </p>
<div><img src="https://1.bp.blogspot.com/-aHGJZcD-GmI/WpDsUCuGnlI/AAAAAAAAois/t4fM1LPGEfcej_ytStllHGeERXSVygGMgCLcBGAs/s640/A1.jpg" width="640" height="450" data-original-height="712" data-original-width="1010"></div>
<p> </p>
<div>And there's a great deal of consideration of how people will get around with millions of extra people in essentially the same amount of space (as an investor, I've always gone for train links to the City or walking distance from the Sydney CBD). </div>
<p> </p>
<div><img src="https://4.bp.blogspot.com/-nYjMyB370L0/WpDsgFvkAAI/AAAAAAAAoiw/tW2NMZ_pFIYAhZF5E69vfdV5TCOc_-q-ACLcBGAs/s640/A2.jpg" width="640" height="456" data-original-height="469" data-original-width="658"></div>
<p> </p>
<div>Nobody can predict the future, but one thing I will hang my hat on is a massive ongoing demand for rentals close to the middle of Sydney. </div>
<p>From the horse's mouth...</p>
<p>Between 2017 and 2046, Australia’s population is projected to increase by 11.8 million people. </p>
<div>That’s equivalent to adding a new city, roughly the size of Canberra, each year for the next 30 years. </div>
<div> </div>
<div>About 75% of this growth will occur in Sydney, Melbourne, Brisbane and Perth.</div>
<div> </div>
<div>Population growth is a central driver of this change. </div>
<div> </div>
<div>In the next 30 years, Sydney’s population is projected to increase by 2.4 million people, growing to be a city of 7.4 million. </div>
<div> </div>
<div>Over the same period, Melbourne is projected to grow by 2.7 million people, to be a city of 7.3 million. </div>
<div> </div>
<div>Between now and 2046, Brisbane is projected to grow by 1.6 million people and Perth by 2.2 million people, delivering cities of just under 4 million and 4.3 million, respectively.</div>
<div> </div>
<div>This means the Brisbane and Perth of tomorrow will become cities the size of Melbourne and Sydney today. </div>
<div> </div>
<div>While Melbourne and Sydney will become cities comparable to the current size of some of the world’s most significant urban economies, operating more like the Hong Kong, New York and London of today.'</div>
<div> </div>
<div>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</div>
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Brisbane and Perth of tomorrow will be cities the size of Melbourne and Sydney today: Pete Wargent

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<div><span>Sadly an inevitable consequence of the internet age for investors has been a focus on shorter and shorter timeframes. </span></div>
<div><span><br>While extra frequency of analysis can be interesting and fun, for most investors the best results will be secured by seeing the big picture and building a long term plan around it, particularly so in property investment which is ideally suited to a longer time horizon.</span></div>
<div><span> </span></div>
<div>When it comes to population and demographic projections, there are certainly plenty of cranks making forecasts, but if you're going to pay attention to any of them, then bugrudgingly it's got to be the cranks that determine policy. </div>
<div> </div>
<div>Over the short term to June 2019, the drivers of a rebound population growth from net overseas migration are clear enough, at least according to the latest available figures from the Department of Immmigration and Border Protection (DIBP). </div>
<div> </div>
<div><a href="/images/2016/01/11/A5.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/01/11/A5.jpg" alt=""></div>
<div> </div>
<div>
<div><strong><span style="text-decoration: underline;">But what about for the longer term?</span></strong></div>
<div> </div>
<div>It is often said that infrastructure investment is a key driver of property price growth, and this can certainly be the case whereby the multiplier effect of new projects generate economic activity, while infrastructure can also make certain suburbs a more appealing prospect. </div>
<div> </div>
<div>Of course, we have just been through a once-in-a-century resources investment boom, which temporarily caused a spike in dwelling prices in some towns, before they <a href="https://www.smartpropertyinvestment.com.au/news/14137-6-mining-towns-go-from-boom-to-bust" target="_blank">crashed</a> again as supply responded and contractors skipped town. </div>
<div> </div>
<div>Infrastructure investment is evidently only one part of the puzzle, and it needs to be coupled with a strong and sustainable growth in population, economic activity, and household wealth. I'd further add land supply constraints to that. </div>
<div> </div>
<div>In this context I took another read of Infrastructure Australia's latest estimates and projections, so let's take a 60-second look at what they say. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">"Population a key driver of economic growth" </span></strong></div>
<div> </div>
<div>The "three Ps" model of economic growth applied by the Australian Treasury has population growth at its very core: </div>
<div> </div>
<div><a href="/images/2016/01/11/B1.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/01/11/B1.jpg" alt=""></div>
<div> </div>
<div>
<div>In the 2015 Intergenerational Report population growth was assumed to drive for <strong><span style="text-decoration: underline;">almost half</span></strong> of the projected economic growth, measured in real Gross Domestic Product (GDP), over the next four decades.</div>
<div> </div>
<div><span>Projected population figures quoted in April 2015 by the Infrastructure Australia audit background paper were somewhat higher than the equivalent figures released in 2008, and tend to mirror previous projections by the Australian Bureau of Statistics reasonably closely. </span></div>
<div><span> </span></div>
<div>Notably, it is clearly articulated that state governments are planning for their capital cities to continue taking on a continually greater share of the state's population, particularly in the most populous states.</div>
<div> </div>
<div><a href="/images/2016/01/11/B2.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/01/11/B2.jpg" alt=""></div>
<div> </div>
<div><span>As such, going forward an ever greater share of the actual population growth must correspondingly take place in the capital cities, as confirmed by the projections. </span></div>
<div><span> </span></div>
<div><a href="/images/2016/01/11/B3.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2016/01/11/B3.jpg" alt=""></span></div>
<div> </div>
<div> </div>
<div>
<div><span>These are telling numbers indeed, but for mine it's the texture provided by the Government that is the really interesting bit:</span></div>
<div><span> </span></div>
<div><span>"Population growth is likely to have its greatest impact in Australia’s cities. Around the globe, cities are increasing their share of national population. Australia is already one of the most urbanised countries in the world. It would be unusual – if not remarkable – if Australia were to chart a materially different path from its past (or where the world is heading), at least over the next 15 years or so."</span></div>
<div><span> </span></div>
<div><strong><span style="text-decoration: underline;"><span>Looking forward</span></span></strong></div>
<div><span> </span></div>
<div><span>On the medium level projections, by 2031 Australia’s capital cities will be home to 6.4 million extra people (around 43.4 per cent more than 2011). The growth to 2061 (15.7 million persons) is around 1 million persons more than the current combined population of all of Australia’s capital cities.</span></div>
<div><span> </span></div>
<div><span>Note in particular the enormous projected growth in Greater Sydney, Melbourne, Brisbane, and Perth respectively (click to enlarge).</span></div>
<div><span> </span></div>
<div><a href="/images/2016/01/11/A4.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2016/01/11/A4.jpg" alt=""></span></div>
<div> </div>
<div> </div>
<div><span>Or looked at graphically.</span></div>
<div><span> </span></div>
<div><a href="/images/2016/01/11/A3.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2016/01/11/A3.jpg" alt=""></span></div>
<div> </div>
<div> </div>
<div><span>Looked at another way, the gradients of capital city projections show how the four largest cities are expected to garner the great bulk of the projected growth in population.</span></div>
<div><span> </span></div>
<div><a href="/images/2016/01/11/A5-1.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span> </span></div>
<div><span><img src="/images/2016/01/11/A5-1.jpg" alt=""></span></div>
<div> </div>
<div>
<div><span><strong><span style="text-decoration: underline;">Infrastructure plans and peri-urbanisation</span></strong></span></div>
<div><span> </span></div>
<div>
<span>Projected population growth between 2011 and 2031 is evidently huge - the equivalent of an entirely new Melbourne and Brisbane combined! - while t</span><span>he projected growth to 2061 is more than all of the existing population of the capital cities cobbled together.</span>
</div>
<div><span> </span></div>
<div><span>However, according to the Australian Government, regional development and decentralisation policies tend to have a short life span, and thus regional population growth is forecast to decline as a share of the pie:</span></div>
<div><span> </span></div>
<div>
<span>"It is unclear whether governments and the Australian community would support material ongoing interventions over the long term to encourage decentralised growth. P</span><span>roposals for investment in regional areas need to be supported by rigorous and transparent analysis."</span>
</div>
<div><span> </span></div>
<div><span>A handful of areas which are close to the capital cities might be expected to grow appreciably, being "peri-urban" locations with social and economic linkages to the capital cities. These are cited as follows:</span></div>
<div><span> </span></div>
<div><a href="/images/2016/01/11/B4.jpg" target="_blank"><span>Click to enlarge</span></a></div>
<div><span><img src="/images/2016/01/11/B4.jpg" alt=""></span></div>
<div> </div>
<div> </div>
<div>
<div><span>Notes the Government: "In the absence of employment growth in these locations, ‘journey to work’ trips to and from the capital city may increase appreciably."</span></div>
<div><span> </span></div>
<div><strong><span style="text-decoration: underline;">Infrastructure investment: cities are critical</span></strong></div>
<div> </div>
<div>The infrastructure audit background paper could hardly have been more explicit in its conclusions, so to wrap up I will simply quote it directly:</div>
<div><span> </span></div>
<div><span>"Within the capital cities, the location of new development and population growth will be critical. While the cost of providing new infrastructure in ‘greenfield areas’ is substantial, the cost of retrofitting or augmenting some infrastructure (for example transport links in tunnels) in established areas can also be high. </span></div>
<div><span> </span></div>
<div>
<span>With a few exceptions, the population case for expanding infrastructure networks in regional areas is less obvious. Arguments for investment in infrastructure in those areas will be driven more by social considerations."</span><br><span><br></span>While I don't agree with the intended policy - I don't originally hail from a capital city myself after all - it is abundantly clear that infrastructure investment will be focussed very heavily on the capital cities. </div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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</div>
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Population growth and infrastructure crucial for property price growth: Pete Wargent

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<div>Despite evidence of a slowdown in immigration across many parts of Australia, we recently saw immigration accelerate to a 4-year high. </div>
<div> </div>
<div>The main population growth is being seen particularly in Melbourne, and in Sydney. </div>
<div> </div>
<div>And now it's getting faster. </div>
<div> </div>
<div>In February, permanent and long term arrivals soared to 103,570, the single biggest month on record. </div>
<div> </div>
<div>Meanwhile, long term departures fell to just 30,080, resulting a net intake of 73,490 in a single month, which puts the high volume of apartment construction in a different light.</div>
<div> </div>
<div>Of course, immigration can dry up or even turn negative when the outlook turns bad, but for now population growth is absolutely hammering along.</div>
<div> </div>
<div>It may seem odd that the monthly intake just hit a record high given weak employment figures.</div>
<div> </div>
<div>But remember that most immigrants head for New South Wales and Victoria where the economies have been performing relatively well, and jobs vacancies have been highest. </div>
<div> </div>
<div>Smoothing the permanent and long term immigration figures over the last year shows only an apparently small spike.</div>
<div> </div>
<div>However, caution should always be urged when using these numbers from month to month, not least because overwhelmingly the "long term" departures from Australia have historically returned to Australia within a year. </div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/04/13/B1-1.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/13/B1-1.jpg" alt=""></div>
<div> </div>
<div>There has been a very sharp drop in the number of permanent settlers from New Zealand and the United Kingdom in recent years. </div>
<div> </div>
<div>The big numbers are now hailing from China, and especially India, with a crunching 2,330 Indian settlers in February. </div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/04/13/B6-1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/13/B6-1.jpg" alt=""></div>
<p><br><span>The number of settlers from North Africa &amp; the Middle East has also comfortably more than doubled over the past year, reflecting a quietly increased humanitarian intake.</span></p>
<div><strong><span style="text-decoration: underline;">Record visitors, many from China</span></strong></div>
<div><strong><span style="text-decoration: underline;"> </span></strong></div>
<div>Perhaps the less well understood side of the equation is the huge number of short term arrivals to Australia, which tore to another record in February at more than 8.36 million. </div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/04/13/B4-1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/13/B4-1.jpg" alt=""></div>
<div class="separator"> </div>
<div>There has been a substantial uplift in the number of visitors from America and India, but the real driver has been another record surge in visitors from China. </div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/04/13/B5-1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/13/B5-1.jpg" alt=""></div>
<div> </div>
<div>Lunar New Year straddled January and February this year, but looking at the original data over the three months to February an unprecedented 525,500 visitors from China, Taiwan, and Hong Kong graced Australian shores. </div>
<div> </div>
<div>Wow. </div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/04/13/B2-1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/13/B2-1.jpg" alt=""></div>
<div class="separator"> </div>
<div>Finally, I've been blathering on since 2015 about how international students will ultimately become the main driving force of migration into Australia. </div>
<div> </div>
<div>And check out the number of education arrivals in February at 123,900, by far the biggest month on record and more than 30 percent higher than a year ago. </div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/04/13/B3-1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/13/B3-1.jpg" alt=""></div>
<p> </p>
<div>International students largely hail from China, and many are expected in time to become Australian residents on sundry visa types. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
<div> </div>
<div>Think I've posted more than enough here for a day or two, but my population growth versus dwelling completions models show that the oversupply of apartments in Melbourne...well, it basically isn't.</div>
<div> </div>
<div>In Sydney the story is a little different, in that supply has been playing catch up, but with a record number of dwellings under construction right across the state in 2016 the balance is swing sharply as 2017 rolls on. </div>
<div> </div>
<div>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
</div>
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The property effect of record busting immigration: Pete Wargent

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<p>EXPERT OBSERVER</p>
<p>As at June 2018, an estimated 17,650,130 residents of Australia were born in Australia.</p>
<p>While this might seem like a high number, it shows that 29.4% of residents were born overseas. Based on data from the ABS, which dates back to 1996, this is the highest share of residents born overseas on record.</p>
<p>It also shows that over 2017-18, Australian born residents increased by 1.1%, overseas born residents increased in population by a much larger 2.8%. While that figure is high, it was down from 3.3% over the previous year.</p>
<p><img src="https://www.urban.com.au/images/2019/4/11/CL%20PP%20Population%201.JPG" alt=""></p>
<p>Harking back to colonial times, England remains the largest source of residents that were born overseas. In fact, almost 1 million residents were born in England, which accounts for 13.5% of all Australian residents that were born overseas. The top 10 countries of birth accounted for 54.8% of all residents that were born overseas as at June 2018.</p>
<p>Another interesting point of note is that migration from certain countries has clearly slowed.</p>
<p>The number of persons born in England peaked at 1,012,780 persons in 2013, consistently falling to its current level. The number of persons born in New Zealand also peaked in 2013 at 585,390, as did persons born in Scotland (142,360) and persons born in Italy (200,670).</p>
<p><img src="https://www.urban.com.au/images/2019/4/11/CL%20PP%20Population%202.JPG" alt=""></p>
<p> </p>
<p>While we have seen fewer residents born in in these countries over the past five years, there has been a significant rise in persons born in China (432,400 in 2013) and India (378,480) over the same five-year period.</p>
<p>Twenty years ago, the top 10 countries of birth for residents born overseas accounted for 56.0% of all residents born overseas. Keep in mind that in 1998, a much lower number of residents were born overseas.</p>
<p><img src="https://www.urban.com.au/images/2019/4/11/CL%20PP%20Population%203.JPG" alt=""></p>
<p> </p>
<p>The makeup of the CoreLogic top 10 list 20 years ago is quite different to how it currently looks. China is now the second largest source of residents while 20 years ago it was the seventh largest.</p>
<p>India, which is now the third largest source of residents was the 12th largest source, Malaysia is now the ninth largest source and was the 13th largest source 2 decades ago and South Africa is now the seventh largest source of residents compared to 17th 20 years ago.</p>
<p>20 years ago, Greece was the sixth largest source of residents born overseas compared to 15th now, Germany was the eighth largest source compared to being 14th now and Netherlands was the 10th largest source compared to 25th now.</p>
<p><img src="https://www.urban.com.au/images/2019/4/11/CL%20PP%20Population%204.JPG" alt=""></p>
<p> </p>
<p>Although the Federal Government has recently announced that they are set to reduce the migration intake going forward, Australia is still set to be a very multicultural country.</p>
<p>Furthermore, demand for our education services, particularly from the world’s two most populous countries (China and India) is anticipated to remain high. As a result, expect even more residents of Chinese and Indian heritage to find their way to our shores over the coming years.</p>
<p>Similarly, those countries such as Scotland and Italy will likely see themselves fall out of the top 10 list over coming years with new countries of origin finding their way to the top 10 list.</p>
<p><em>CAMERON KUSHER is <span>head of research for the <em>Australian branch of</em></span> CoreLogic</em></p>
<p><em>Mr Kusher regularly posts on the <a href="https://www.corelogic.com.au/taxonomy/corelogic-people/cameron-kusher" target="_blank">CoreLogic website</a>.</em></p>
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ckusher-ujnxiKuFQs

Increasing numbers of overseas migrants: CoreLogic's Cameron Kusher

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<div>The latest <a href="https://www.abs.gov.au/ausstats/abs@.nsf/mf/3401.0/" target="_blank">Overseas Arrivals and Departures</a> data for the month of June 2015 confirmed that population growth in Australia will be once again be slower in this calendar year.<br><br>As I argued a year ago, by the third quarter of 2014 it had become evident that the assumption reported widely in the media that the population of Australia would boom by around 2.4 million persons over the next six years was too high - much too high, in fact!<br><br><div class="separator"><a href="https://1.bp.blogspot.com/-ZK9-CCXjNWs/VcWS2tAESjI/AAAAAAAAXd0/LM0ux2QIp00/s1600/A1.jpg"><img src="https://1.bp.blogspot.com/-ZK9-CCXjNWs/VcWS2tAESjI/AAAAAAAAXd0/LM0ux2QIp00/s400/A1.jpg" width="400" height="65"></a></div>
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<div class="separator"> </div>
</div>
<div>In the event population growth slowed considerably to be up by an estimated +330,200 in 2014, and population growth will be slower again in 2015.<br><br>Over the longer term we might indeed expect to see much stronger levels of population growth return for the reasons I have already explored, but for the foreseeable future lower population growth will be the new norm.<br><br>Let's take a look at the implications of the latest figures in three parts.<br><br>
</div>
<p><strong><span style="text-decoration: underline;">Part (i) - Slowing immigration nationally</span></strong><br><br></p>
<div>The number of long term arrivals into Australia has slowed further over the past year, and consequently net long term migration has pulled back to +292,000 on a rolling annual basis, sliding from a recent peak of more than +400,000.</div>
<div> </div>
<div>This suggests that population growth in 2015 will likely slow further perhaps to around +300,000 persons from +330,200 in 2014.</div>
<p><a href="https://2.bp.blogspot.com/-l47JN3T3sRc/VcWZDBPOGOI/AAAAAAAAXeM/e9Bki5YjSO8/s1600/A3.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><a href="https://2.bp.blogspot.com/-l47JN3T3sRc/VcWZDBPOGOI/AAAAAAAAXeM/e9Bki5YjSO8/s1600/A3.jpg"><img src="https://2.bp.blogspot.com/-l47JN3T3sRc/VcWZDBPOGOI/AAAAAAAAXeM/e9Bki5YjSO8/s640/A3.jpg" width="640" height="284"></a></div>
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<div class="separator">One of several key potential drivers of this trend has been the sharp reduction in the number of permanent settlers from New Zealand.</div>
<div class="separator"> </div>
<div class="separator">Meanwhile the number of permanent settler Brits has slowed to a mere trickle - just 470 settlers in June hailed from the United Kingdom, the lowest monthly figure across the full 25 years of available data.</div>
<div class="separator"> </div>
<div class="separator">Kiwi citizens can move freely between Australia and "home" and as such are theoretically far more sensitive to shifts in labour market conditions.</div>
<div class="separator"> </div>
<div class="separator">And while spare capacity in the labour market has being rising over the past three years in Australia, it had been tightening for some time in New Zealand.</div>
<div class="separator"> </div>
<div class="separator">With mining construction activity now slowing sharply in Australia - and Christchurch in New Zealand seeing a high volume of reconstruction activity - it is perhaps unsurprising that fewer New Zealanders are making the trans-Tasman trip on a permanent footing (although a record 1.27 million still came to Australian shores on a short-term basis over the past year).</div>
<div class="separator"> </div>
<div class="separator">On the other hand the number of settlers from countries such as China and India continues to slowly but surely break new heights.</div>
<div class="separator"> </div>
<div class="separator"><a href="https://3.bp.blogspot.com/-3t9V6rJXEx4/VcVDUvK0AdI/AAAAAAAAXco/XFqtxZxRjsE/s1600/Arr6.jpg" target="_blank">Click to enlarge</a></div>
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<div class="separator"> </div>
<div class="separator">Indeed, the overwhelming majority of settlers in Australia now hail from Asia, with the middle east the only other region or continent presently in a confirmed uptrend.</div>
<div class="separator"> </div>
<div class="separator"><a href="https://3.bp.blogspot.com/-h6P7CisOE5w/VcVDUyRlWmI/AAAAAAAAXck/EIlxWS9olsY/s1600/Arr7.jpg" target="_blank">Click to enlarge</a></div>
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<div class="separator"><a href="https://3.bp.blogspot.com/-h6P7CisOE5w/VcVDUyRlWmI/AAAAAAAAXck/EIlxWS9olsY/s1600/Arr7.jpg"><img src="https://3.bp.blogspot.com/-h6P7CisOE5w/VcVDUyRlWmI/AAAAAAAAXck/EIlxWS9olsY/s640/Arr7.jpg" width="640" height="282"></a></div>
<div class="separator"> </div>
<p><strong><span style="text-decoration: underline;">Part (ii) - Record visitors to Australia</span></strong></p>
<div class="separator"> </div>
<div>There is a flip side to the softer pace of growth in Australia's economy, and that is that falling interest rates and a correspondingly weakening currency have encouraged the tourism sector to attract a record number of short term arrivals Down Under. </div>
<div> </div>
<div>This year the rolling annual number of short term arrivals blasted past 7 million for the first time to a record 7.12 million in the 2015 financial year (denoted by the blue line below).</div>
<p><a href="https://4.bp.blogspot.com/-ZSVe0fqeMkA/VcVDTzyHU8I/AAAAAAAAXcM/3J4ENKKyCxk/s1600/Arr2.jpg" target="_blank">Click to enlarge </a></p>
<div class="separator"><a href="https://4.bp.blogspot.com/-ZSVe0fqeMkA/VcVDTzyHU8I/AAAAAAAAXcM/3J4ENKKyCxk/s1600/Arr2.jpg"><img src="https://4.bp.blogspot.com/-ZSVe0fqeMkA/VcVDTzyHU8I/AAAAAAAAXcM/3J4ENKKyCxk/s640/Arr2.jpg" width="640" height="280"></a></div>
<p><span style="line-height: 1.3em;">While the corresponding drag on overseas travel by Australians has only been fairly gradual to date (denoted by the red line above), the weaker dollar also means that over time comparatively fewer Aussies will be inclined to make overseas trips, which in turn will act as a further boost for the domestic economy. </span></p>
<div>I holidayed on the Sunshine Coast myself in the past week, and it is quite evident that more Aussies are inclined to hang out in locations such as Noosa over the winter than has been the case in recent years.<br><br>After all, travelling overseas is not <em>quite</em> as much fun as when the dollar was at sky high levels just a few years ago!</div>
<div> </div>
<div>Accordingly the ratio of short term departures to short term arrivals has steadily been trending down for the past two years.</div>
<p><a href="https://4.bp.blogspot.com/-7dS7i5xs8Fc/VcVDTx-uYTI/AAAAAAAAXcQ/kB4tYIqk8kg/s1600/Arr3.jpg" target="_blank">Click to enlarge</a> </p>
<div class="separator"><a href="https://4.bp.blogspot.com/-7dS7i5xs8Fc/VcVDTx-uYTI/AAAAAAAAXcQ/kB4tYIqk8kg/s1600/Arr3.jpg"><img src="https://4.bp.blogspot.com/-7dS7i5xs8Fc/VcVDTx-uYTI/AAAAAAAAXcQ/kB4tYIqk8kg/s640/Arr3.jpg" width="640" height="280"></a></div>
<p><span style="line-height: 1.3em;">One trend which is definitely </span><strong style="line-height: 1.3em;"><span style="text-decoration: underline;">not</span></strong><span style="line-height: 1.3em;"> slowing down is the number of Chinese visitors to Australia with more than 1.25 million visitors from China, Taiwan and Hong Kong over the past 12 months, with the latest figures showing no signs of this emerging mega-trend easing off.</span></p>
<div>A record 563,800 Americans have also enjoyed the dramatic shift in the exchange rate over the past year.</div>
<p><a href="https://4.bp.blogspot.com/-HcD37dvFQYY/VcVDUnbykGI/AAAAAAAAXcg/2RkrnpmPbWg/s1600/Arr4.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><a href="https://4.bp.blogspot.com/-HcD37dvFQYY/VcVDUnbykGI/AAAAAAAAXcg/2RkrnpmPbWg/s1600/Arr4.jpg"><img src="https://4.bp.blogspot.com/-HcD37dvFQYY/VcVDUnbykGI/AAAAAAAAXcg/2RkrnpmPbWg/s640/Arr4.jpg" width="640" height="276"></a></div>
<p><span style="line-height: 1.3em;">Furthermore there has been an explosion in the number of foreign students in Australia - also largely hailing from Asia - another trend which has in part been driven by exchange rate movements. </span></p>
<div><a href="https://3.bp.blogspot.com/-4h5vgAvj_7I/VcVDVj9-pdI/AAAAAAAAXc0/JuJ1O1YC4k0/s1600/arr5.jpg" target="_blank">Click to enlarge</a></div>
<div><span style="line-height: 1.3em;"> </span></div>
<div class="separator"><a href="https://3.bp.blogspot.com/-4h5vgAvj_7I/VcVDVj9-pdI/AAAAAAAAXc0/JuJ1O1YC4k0/s1600/arr5.jpg"><img src="https://3.bp.blogspot.com/-4h5vgAvj_7I/VcVDVj9-pdI/AAAAAAAAXc0/JuJ1O1YC4k0/s640/arr5.jpg" width="640" height="280"></a></div>
<p><span style="line-height: 1.3em;">This is an emerging demographic trend which will impact Sydney and Melbourne most keenly.</span><span style="line-height: 1.3em;"> </span></p>
<div class="separator">The full impact of the depreciation of Australia's currency has yet to flow through to this data and we will certainly now see further short visitor records broken in the year ahead.</div>
<p><strong><span style="text-decoration: underline;">Part (iii) - 3 implications of lower population growth</span></strong></p>
<p><span style="line-height: 1.3em;">So what are the impacts of slower population growth in Australia, which could continue for the foreseeable future? </span></p>
<div>There will be many impacts, of course, but here are just three of the most prominent observations.</div>
<div> </div>
<div>Firstly, and most obviously, slower population growth will equate to lower demand for goods and services, which in turn over time should result in <strong><span style="text-decoration: underline;">lower economic and employment growth.</span></strong><br><br>Over the next few years there will be a lower than expected requirement for investment in building offices, warehouses, housing, machinery, plant and equipment. </div>
<p><span style="line-height: 1.3em;">Secondly, with employment growth having tracked at an estimated 2.1% or 243,600 new jobs over the past year - which is considerably faster than the estimated rate of population growth of just 1.4 per cent - the Reserve Bank now </span><a href="https://www.rba.gov.au/publications/smp/2015/aug/html/index" target="_blank" style="line-height: 1.3em;">believes</a><span style="line-height: 1.3em;"> that the </span><strong style="line-height: 1.3em;"><span style="text-decoration: underline;">unemployment rate has likely peaked</span></strong><span style="line-height: 1.3em;"> for this cycle. </span></p>
<div>Previously it had been forecast that the unemployment rate would continue rising to around 6.5 per cent, but now the unemployment rate is seen as more likely to be falling again from 2017. The darker blue shaded areas represent the Reserve's 70 per cent confidence interval.</div>
<div> </div>
<div><a href="https://1.bp.blogspot.com/-5Lzmr6uP8M0/VcV_OAii7xI/AAAAAAAAXdc/zeFRKGyrS9o/s1600/UE.jpg" target="_blank">Click to enlarge</a></div>
<div>
<br><div class="separator"><a href="https://1.bp.blogspot.com/-5Lzmr6uP8M0/VcV_OAii7xI/AAAAAAAAXdc/zeFRKGyrS9o/s1600/UE.jpg"><img src="https://1.bp.blogspot.com/-5Lzmr6uP8M0/VcV_OAii7xI/AAAAAAAAXdc/zeFRKGyrS9o/s400/UE.jpg" width="400" height="387"></a></div>
</div>
<div>However, there are many regions in Australia where unemployment is still elevated or rising, particularly in resources-influenced regions and in South Australia where the trend rate of unemployment has hit 7.9 per cent and rising.</div>
<div> </div>
<div>Thirdly, with the mining investment supernova now set to implode in spectacular style, the strong rates of immigration which benefited the resources areas of regional Western Australia and regional Queensland have now ebbed away.</div>
<div> </div>
<div><a href="https://2.bp.blogspot.com/-UAU8Pw52o-w/VZsC3PaTSPI/AAAAAAAAWtQ/Ip5KWRT_itE/s640/eng2.jpg" target="_blank">Click to enlarge</a></div>
<div>
<br><img src="https://2.bp.blogspot.com/-UAU8Pw52o-w/VZsC3PaTSPI/AAAAAAAAWtQ/Ip5KWRT_itE/s640/eng2.jpg" width="640" height="274"><br><br>Accordingly <strong><span style="text-decoration: underline;">population growth has become more capital city focused</span></strong>.<br><br>The most recently available data showed that Greater Melbourne and Greater Sydney alone accounted for all but half of Australia's total population growth, while Greater Brisbane and Greater Perth accounted combined for close to nearly a quarter of the total.<br><br>Regional population growth on the other hand has in aggregate been been slow and slowing.<br><br>As for whether the mining boom will have a second wind? Highly unlikely: that's not the way that commodity cycles typically tend to work.<br><br>The Reserve Bank's Commodity Index was once again smoked by another 5 per cent on a monthly average basis in SDR terms in July to be a punishing 20.2 per cent lower over the past year.<br><br>Ouch.<br><br>In Aussie dollar terms the decline has been a somewhat less dramatic 8.5 per cent year-on-year, but nevertheless Australia's terms of trade (TOT) remain well above their long run average (and TOT booms have historically tended to over-shoot on the downside too).</div>
<p><a href="https://1.bp.blogspot.com/-Ilkpx3lP19k/VcV_OG-p3zI/AAAAAAAAXdk/KEkm_g7X5W8/s1600/Commods1.jpg" target="_blank">Click to enlarge</a></p>
<p><a href="https://1.bp.blogspot.com/-Ilkpx3lP19k/VcV_OG-p3zI/AAAAAAAAXdk/KEkm_g7X5W8/s1600/Commods1.jpg"><img src="https://1.bp.blogspot.com/-Ilkpx3lP19k/VcV_OG-p3zI/AAAAAAAAXdk/KEkm_g7X5W8/s640/Commods1.jpg" width="640" height="278"></a><br><br></p>
<div>Note that it's not just iron ore and coal prices which have been hammered as demand from China and elsewhere has slowed in the face of a glut of supply.<br><br>Oil, aluminium, copper and gold have all hit half decade lows in recent times, while the price of silver has tracked little better.</div>
<div>
<br>Slightly bizarrely - given that coal prices are well below the project's notional break even point - the Adani Carmichael Mine is one possible exception to the accelerating decline in mining investment.<br><br>Some folk with the power to exert material influence evidently has the government's ear relating to this essentially unviable mega-project.<br><br>Generally speaking, however, mining production is ramping up, there is heavy downward pressure on commodity prices, and ever fewer material projects have been passing viability.</div>
<div>
<br>Going forward population growth in Australia will follow the employment growth, which has been heavily focused on Sydney and Melbourne, and to a somewhat lesser extent Brisbane and the Gold Coast.</div>
<div>
<br>Indeed, over the past year more than 80 per cent of employment growth has been found in New South Wales and Victoria, and overwhelmingly in Sydney and Melbourne. </div>
<div> </div>
<div>With the Western Australian economy slowing and net interstate migration going into reverse gear, population growth will is likely to be heavily focused on the three largest capital cities - a trend which will only be exacerbated by the nascent explosion in foreign students.<br><br>The Reserve Bank added its own outlook for the housing market in the latest SOMP:<br><br><em>"Supply constraints, particularly in Sydney, may limit the extent to which new dwelling investment can satisfy growing demand, which raises the possibility that housing prices will grow more quickly than forecast. </em><br><em><br></em><em>Also, housing prices outside Sydney and Melbourne are little changed over the past year or so and may not yet have responded fully to the very low levels of interest rates."</em>
</div>
<div><em> </em></div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
</div>
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Slower population growth implications for property investors: Pete Wargent

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<p class="p1"><span class="s1">Melbourne has been attracting most of the population growth headlines, justifiably, but many of the outstanding growth areas of Australia are regional centres.</span></p>
<p class="p1"><span class="s1">The population numbers confirm my view that there’s too much emphasis on capital cities and not enough on regional areas.</span></p>
<p class="p1"><span class="s1">We have numerous regional centres which are larger than some of our state and territory capital cities.<span class="Apple-converted-space"> </span></span></p>
<p class="p1"><span class="s1">The Gold Coast-Tweed Heads and Newcastle-Maitland urban areas are both larger than the national capital, Canberra.<span class="Apple-converted-space"> </span></span></p>
<p class="p1"><span class="s1">The Central Coast, the Sunshine Coast, Wollongong and Geelong are all significantly bigger than Hobart; while Townsville, Cairns and Toowoomba are all larger cities than Darwin.</span></p>
<p class="p1"><span class="s1">A recent analysis of the 50 largest urban areas of Australia by “id the population experts” shows which cities grew the most last year and over the past five years. I’d like to focus in particular on the top 20 urban areas.</span></p>
<p class="p1"><span class="s1">In terms of growth in 2017, Geelong is the national growth star with a 2.7% increase, following by nearby Melbourne on 2.6%.</span></p>
<p class="p1"><span class="s1">Next come the Gold Coast and the Sunshine Coast, which both grew 2.5%. Brisbane grew 2%, so the unavoidable conclusion is that Australia has two major centres of exceptional population growth – the Melbourne-Geelong region and South-East Queensland.</span></p>
<p class="p1"><span class="s1">In terms of five-year growth, the top six growth centres are Melbourne (13.5%), the Sunshine Coast (12.7%), Geelong (12.3%), the Gold Coast (11.4%), Darwin (10.2%) and Sydney (10.1%).</span></p>
<p class="p1"><span class="s1">All of those urban centres, apart from Darwin (which has fallen into a bit of slump in recent years), had significant growth in 2017.</span></p>
<p class="p1"><span class="s1">Other locations to record strong growth in both 2017 and the past five years include Ballarat (the 18</span><span class="s2"><sup>th</sup></span><span class="s1"> largest urban area in Australia) and Bendigo (the 19</span><span class="s2"><sup>th</sup></span><span class="s1"> largest).</span></p>
<p class="p1"><span class="s1">Looking at centres in the 50 largest urban areas but not in the top 20, the two standout growth areas are Melton and Warragul-Drouin.</span></p>
<p class="p1"><span class="s1">Melton, out in the far west of the Melbourne metropolitan area, grew 5.3% in 2017 and 26.6% in the past five years.</span></p>
<p class="p1"><span class="s1">Warragul-Drouin, in the Gippsland region east of Melbourne, increased 3.4% in 2017 and 16.7% in the past five years.</span></p>
<p class="p1"><span class="s1">Other ABS information shows that many of these regional areas are gaining population from people moving from nearby capital cities. The greatest beneficiary of this trend last year was the Gold Coast, followed by the Sunshine Coast.</span></p>
<p class="p1"><span class="s1">Others to gain from refugees from the city include regional areas close to Melbourne, including Latrobe-Gippsland, Geelong, Bendigo and Ballarat.<span class="Apple-converted-space"> </span></span></p>
<p class="p1"><span class="s1">So there’s an undeniable pattern to the population growth achievers of Australia. Victoria is a stand-out, both Melbourne as the leading capital city and numerous regional centres which are surging ahead, including Geelong, Ballarat, Bendigo and Warragul-Drouin.</span></p>
<p class="p1"><span class="s1">Beyond Victoria, it’s all about South-East Queensland, with Brisbane, the Sunshine Coast and the Gold Coast all achieving consistently high growth.</span></p>
<p class="p1"><span class="s1">If we change the focus and concentrate on Local Government Areas rather than continuous urban areas, there’s a slightly different focus, although Melbourne remains the star.</span></p>
<p class="p1"><span class="s1">In terms of percentage population growth in 2017, the top 10 LGAs in Australia, according to “id the population experts”, include six municipalities in the Melbourne region, two in Sydney and two in Perth.</span></p>
<p class="p1"><span class="s1">From this perspective, the leading population growth LGA last year was Camden in the far south-west of Sydney, which there is ample land for new housing development. The Camden LGA grew 8.4% in 2017.</span></p>
<p class="p1"><span class="s1">In the Perth region, the LGAs of Serpentine-Jarrahdale (up 6.5%) and Kwinana (up 4.6%) ranked No.3 and No.7 among the nation’s municipalities for population growth rates in 2017.</span></p>
<p class="p3"><span class="s3">T<em>erry Ryder is the founder of hotspotting.com.au</em></span></p>
<p class="p3"><span class="s4"><a href="https://mailto:ryder@hotspotting.com.au"><em>ryder@hotspotting.com.au</em></a></span></p>
<p class="p4"><span class="s3"><em>twitter.com/hotspotting</em></span></p>
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terryryder-YECXbqmri2

Too much emphasis on capital city population growth and not on regional: Hotspotting's Terry Ryder

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<p>The Australian Bureau of Statistics (ABS) released demographic data for the March 2015 quarter earlier today. The data showed that despite a quarterly bounce in population growth, the rate of growth continues to trend lower.</p>
<p>The national population increased by 1.35% over the 12 months to March 2015 which was the lowest annual rate of growth in nine years. Although growth slowed it should still be noted that Australia’s population increased by 315,952 persons over the past year. Although population growth has slowed it remains well above the long term average of 256,801 per annum.</p>
<p><a href="/images/2015/09/25/Chart-13.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/09/25/Chart-13.jpg" alt=""></p>
<p><span>Over the March 2015 quarter, the national population increased by 93,942 persons, substantially higher than what was recorded over the December 2014 quarter when the nationally population recorded an increase of 64,010 persons.  Over the 12 months to March 2015, the national population increased by 315,952 persons which is the lowest annual increase in population since the 12 month period ending June 2011 when the nation recorded population growth of 308,274 persons.</span></p>
<p><a href="/images/2015/09/25/Chart-23.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/09/25/Chart-23.jpg" alt=""></span></p>
<p><span>At a national level there are two components of population growth, natural increase (births minus deaths) and net overseas migration. Each of these measures recorded a bounce over the past quarter however, both components continue to trend lower on an annual basis. Over the 12 months to March 2015 natural increase was recorded at 142,898 persons and net overseas migration was recorded at 173,054. Natural increase was -9.7% lower over the year while net overseas migration was -16.0% lower, its largest annual fall since March 2011.  </span></p>
<p><span>While the decrease in the rate of natural increase implies a sharp rise in deaths or slowdown in births, it is important that the ABS has noted that there are problems with the preliminary natural increase estimates due to a lag in registering births in both NSW and Vic.  We are likely to an upwards correction to this data over the coming quarters which will lift the rate of population growth.</span></p>
<p><a href="/images/2015/09/25/Chart-32.jpg" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/09/25/Chart-32.jpg" alt=""></span></p>
<p>Across the states and territories the rate of annual population growth is lower compared to the same time a year ago across the board. Although population growth is slowing, the sharpest slowdown in population growth is being felt in WA and NT. In WA the rate of population growth has slowed to 1.4% over the year to March 2015 from 3.5% two years earlier.  Similarly, annual population growth in the NT was 3.0% two years ago and the latest data shows it at just 0.2% over the past year.</p>
<p>Looking at the components of population growth we will ignore natural increase at this juncture because the ABS have highlighted some issues with the data for NSW and Vic. The two other drivers of population growth at a state and territory level are overseas migration and interstate migration.  NSW and Vic are the major benefactors of net overseas migration to Australia while Vic and Qld are the only benefactors of interstate migration.</p>
<p><a href="/images/2015/09/25/Chart-4.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/09/25/Chart-4.jpg" alt=""></p>
<p><span>Over the 12 months to March 2015, net overseas migration to Australia was recorded at 173,054 persons. More than two thirds of net overseas migration flowed to NSW (38.9%) and Vic (31.6%). If you add in Qld (12.1%), the three most populous states accounted for 82.6% of net overseas migration. Although net overseas migration is trending lower, the impact of the end of the mining boom is very clear. In March 2013, annual net overseas migration was recorded at 41,745 persons in Qld, 53,834 persons in WA and 5,173 persons in NT. Over the past year, annual net overseas migration had slowed to 20,857 persons in Qld, 15,383 persons in WA and 1,041 persons in NT.  </span></p>
<p><span>Conversely in NSW where mining is a smaller part of the overall economy, net overseas migration has actually increased from 63,661 persons in March 2013 to 67,272 persons in March 2015. Similarly in Vic net overseas migration has been much stronger over the past 2 years, falling slightly from 55,562 persons to 54,745 persons. Of course while most of the overseas migration is coming to NSW and Vic, most of that is flowing into Sydney and Melbourne fuelling more demand for housing and helping to explain why home value growth in those two cities has been so strong.</span></p>
<p><a href="/images/2015/09/25/Chart-5.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/09/25/Chart-5.jpg" alt=""></p>
<p>At a national level net interstate migration cancels itself out and does not add to population growth however, at a state level it can greatly impact on population growth. Over the past 12 months, only Vic (9,774 persons) and Qld (6,195 persons) have seen a positive inflow of residents from other states. In fact, net interstate migration into Vic is currently at its strongest level on record. Qld has recorded a slight rebound in net interstate migration however, it continues to hover around its lowest level on record. For the length of this data series (since 1981) NSW has consistently lost residents to other states and that remains the case losing 6,195 residents over the year. </p>
<p>The outflow of residents from NSW is hovering at around record low levels. WA has typically been a benefactor of interstate migration however, it lost a net -1,269 residents last year; its greatest loss since June 2003. Again we can see the impact of the slowing of the resources sector. In March 2013, net interstate migration was recorded at a higher 9,026 persons in Qld and 9,691 persons in WA. Conversely, net interstate migration at that time was recorded at -15,513 persons in NSW and 3,454 persons in Vic.</p>
<p>The trends in overseas and interstate migration in particular show that the population growth tide has turned away from the mining states and is now firmly focussed on NSW and Vic which have relatively little mining sector exposure. These states are also creating more employment opportunities and are subsequently attracting both people migrating from overseas and interstate. Higher population growth means more demand for housing, which is one of the drivers pushing dwelling values higher in Sydney and Melbourne.</p>
<p>The more up-to-date overseas arrivals and departures data from the ABS indicates that permanent and long-term arrivals into Australia have continued to trend lower since March 2015. This indicates that net overseas migration is expected to continue to trend lower over the coming quarters. It is also likely to result in more of these migrants wanting to move to NSW and Vic due to the fact that these are the states where more jobs are being created.</p>
<p>This is of course despite the fact that the two capital cities in these two states recording home value growth which is well in excess of growth elsewhere.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.</em></p>
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