Net Overseas Migration

May 25, 2017

Net Overseas Migration plays a critical role in shaping Australia’s economy and is a major driver of demand for dwellings. The government records the number of skilled migrants and long term visitors entering the country. Long term are visitors classified as those who reside in Australia for 12 months over a 16 month period.

From 1982 to 2006 Australia’s population growth was measured 1.27%. What followed was a considerably higher growth rate caused by initiatives from Federal Government to increase intake of skilled workers and long term visitors. China’s economic boom caused excessive demand from resources in Australia, causing demand for skilled workers to build the appropriate infrastructure. This surge of overseas migrants into Australia was a major influence of the price growth in housing as it had an immediate impact on the demand for dwellings in which these migrants required.

 

 

 

South Australia’s net overseas migration peaked in 2008/09 at 18,000, then halved over the following two years in the wake of the GFC and the subsequent economic downturn that ensued.

 

New South Wales and Victoria experienced substantial net overseas migration between 2011-2014, supported by escalating arrivals of those on both working and study visas(1). New South Wales received 16% more migrants than Victoria. This was not only due it its natural attraction, NSW experienced stronger infrastructure spending and housing construction generating further job growth than Victoria.

 

Resources are a significant driver of overseas migration, this is evident in the past performance Western Australia and Queensland. These states achieved record overseas migrations of 53,200 persons in 2011/12 and 45,000 respectively. An increase in working visa’s driven by the resource sector contributed to this boost in population. However, the recent decelerating in demand for resources from China triggered a significant decrease in mining investment. With this falling investment in resources, existing infrastructure projects are shifting to less labour intensive therefore there is a lesser need for skilled labour. This is evident in Western Australia and Queensland’s sharp fall in overseas migration from 2013.

 

Australia overseas migration is expected weaken in the coming years. This is predominantly due migrants on temporary working visas returning to their country of origin. With the maximum period of a temporary 457 visa is 4 years; therefore a surge of arrivals will result in a flood of departures four years later.(2) Furthermore, Australia will not be able to match the migrant intake experienced in the past as there is a lesser demand for skilled migrants.

 

 

Furthermore, migrants from New Zealand should also be considered. Historically, they make up a large proportion our skilled migrants. Seen above, migration from New Zealand is at its lowest since 2003 and this trend continues in line with the downturn of the resource sector.

 

As seen above, migration into Western Australia and Queensland trends with the current state of the resource sector. With the mining boom diminishing, New South Wales and Victoria have accounted for increasing population growth predominantly due stronger employment prospects and liveability. Nevertheless, Australia’s overseas migration remains one of the strongest in the world. With a robust economy combined with high liveability, it will remain a popular choice.

 

 

 

 

 

1 BIS Shrapnel

2 BIS Shrapnel

 

 

 

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