Overseas Migration Pattern: Essential to Prices in Australian Property

Explore the impact of overseas migration pattern on prices in the Australian property market!

Over the next decade, what are the most probable issues that are going to have a huge impact on the property and business market in the country? This is actually something that is more easily understood after it has already happened more than it could be envisioned or told in advance.

Prior to the global financial crisis in Australia around 10 years ago, a shrewd and intelligent assessment of the demographic elements that are giving shape to the Australian economy would have shown the rise of Chine looming in the horizon, an increase in the net overseas migration, as well as the dawn of the mining boom, and the wider transformation of the economy heavily influenced by the new technology.

10 years ago a keen observer of the people in Australia would have more broadly discerned and spotted the possible changes in the behaviour shaped by being universally connected. While there were businesses that caved in and ultimately ended, there were other new ones that rose because of, as an example, the smart phone’s emergence. Majority of the market now use platforms and technologies to connect, research, navigate, purchase, and even form relationships. Most of these technologies were not even around in 2006 yet, or seen as mainstream. It’s amazing how so many things can change within a span of 10 years.

Migration to Australia 2024

The most crucial game-changer in the demographics which could have a huge impact on the demand for property in Australia over this decade’s balance is the steady decline of net overseas migration. It is safe to say that ‘big Australia’ is over. In the year to June of 2009, the net overseas migration reached to 300,000. The number that is needed in order to meet the vision of big Australia with a population of 38 million by the year 2050 is 180,000. Mr Kevin Rudd, the former prime minister, stated in late 2009 that he believes in a big Australia, something that has started a national debate regarding the leves of migration needed to be done in the country.

Both the resources and mining boom were well in progression at the time, and during 2010 and 2011, the net overseas migration decelerated however, it made a recovery and went up to 227,000 in the year to June of 2013. The total growth of Australia in the same year was a driving demand of 390,000 for all capital cities’ household formation, as well as in a great number of mining communities in remote areas.

The net overseas migration since then has declined to just 168,000 for the year to June of 2015. In this year, Australia’s total growth was 317,000, and in just a period of 2 years, the population growth across the country has dropped by 23 per cent, or 73,000. However, in spite of this staggering drop in the rate of population growth in the country, Melbourne and Sydney’s numbers kept increasing at more or less the same rate at 90,000 and 80,000, respectively.

There is quarterly data made available for September of 2015 which shows that the country’s net overseas migration is still on the decline, and for the year to June of 2015, the numbers were at 168,000, and for the year to September of 2015 the decline was still on the decline albeit by a couple of hundred individuals. We still do not know what the present numbers are however, the property industry should remain hopeful that the period from September to December should reflect the lowest point of the cycle.

The residential property demand in the 2 biggest cities of the country is being kept alive by the interstate migration flows of workers all looking for job growth that is knowledge and worker connected, not by strong overseas migration. Queensland’s net interstate migration for the year ending in September of 2015 was at 7,000, which can easily be compared to the 29,000 net growth of Queensland about 10 years ago.

There really is a great possibility that Queensland’s net interstate migration has become negative, and for the 1^st time too, since the year 1947. Data which is scheduled to come out on the 23^rd of June is going to verify if Queensland is indeed losing its residents to interstate destination for the 1^st time in 2 generations, and if its net overseas migration is still continuing to drop.

The reason that the net overseas migration is on the decline is of course, because of the mining boom’s collapse. It’s a fact that we no longer need as many a number of 457 visa workers as we did back in 2012. Aside from that, a diminution has been detected in the intake of Kiwi nationals. The earthquake in Christchurch back in 2011 eventually started up a construction boom in New Zealand which gave job prospects on that side of the Tasman a much needed boost. New Zealanders who are based in Australia headed home because of that, and the net Kiwi intake, or NKI, of Australia in the last financial year was 6,000. Back in 2013, at the peak of the mining boom, the net Kiwi intake was at 33,000.

The property demand aspect all over the country, especially in the thriving Melbourne and Sydney markets is in fact, connected to the net overseas migration’s decreasing levels. The growth in Melbourne and Sydney by attracting workers from the interstate can only do so much to the country. What we really need to do is reverse the net overseas migration’s trend, as the numbers need to be pushed back nearer to the 180,000 mark so that the housing demand can be sustained, and for the housing supply to be absorbed.

Net overseas migration is the demographic switch which has the capability to show oversupply in the residential property market in Australia’s big cities. Should the level decrease to a much lower number (for example, 168,000 from 6 years earlier’s 300,000), then there is no doubt the property markets in Melbourne and Sydney are also going to eventually feel the blow. It also means that there is going to be a not-so-easy lag in time between the residential product supply, and the ability of the market to absorb those supplies. It all depends on whether there is a rise or fall in the Australian population’s growth.

One other big demographic issue that affects Australian property demand is the possibility for an increase in the number of Chinese visitors. The largest tourist visitor market of Australia is the 1.3 million New Zealanders travelling to and from Australia and mostly staying with family and friends.

It is possible that by the end of the decade the most number of visitors are going to be the more than 1 million and increasing number of Chinese tourists whose spending patterns vary enormously to that of the New Zealanders.

The increased numbers of visitors from China to Australia is going to be spread across cities which provide direct access flight to the biggest, as well as the 2^nd tier cities in China.

The lifestyle and tourism property sector of the country could basically be transformed by the middle class originating from China who are in the midst of a spending frenzy, which in turn sets the demand for overseas travel to fascinating places such as our own country, in motion.

There are a number of factors which can affect the demand for the residential and commercial property in Australia for the 10 years to come. Those that have been mentioned above: Chinese tourism and net overseas migration, could be adjusted by shifts in policy and behaviour, both of which have not been fully utilised yet.

In spite of the aspects that actually determine the Australian property demand in the future, the concealed foundation is always going to be based on the aggregate demographic trends which are constantly changing.

Source: www.theaustralian.com.au