Migration trends – Outlook for population growth, will Melbourne recover from population losses, interstate and intrastate trends, which regions face ageing population risks and high job vacancies, the future for international and internal migration (Ep.150)

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In this week’s episode, Dave, Cate and Pete take you through:

  1. How has COVID affected population growthFor the last 20 years the Australian population has grown consistently at 1-2.2% year on year. However since the beginning of COVID, this figure has plummeted close to 0% due to international border closures. There is more to the data than migrants and new arrivals, however. Overall population figures also include returning expats, births and deaths. The trio discuss how this has impacted employment, universities and capital city markets. 
  2. Melbourne and Sydney the biggest losers in flight to the regions. There are no surprises that the nations’ largest capitals of Sydney and Melbourne were hit the hardest in the great tree and sea change. There are many and varying reasons aside from COVID lockdowns and working from home to explain why this would be the case. A major factor is runaway house prices, which naturally causes migration and investment when housing affordability bites and regional opportunity presents itself as a more cost effective way of life for some households
  3. The outlook for Melbourne. Melbourne sustained the biggest population losses in 2021, where a total of 32,000 people left for the regions and interstate, while Sydney lost almost 20,000. Prior to this, Melbourne was on the road to overtaking Sydney to be the most populated city in Australia. Dave shares insights from the Centre of Population on the trajectory for Melbourne’s population recovery.
  4. Job vacancies jump in regional Australia. Cate shares the top 5 regions with the biggest increases in job vacancies over the 12 months from February 2022. Job vacancies are putting pressure on businesses in locations and regions that have seen an influx of new arrivals. Interestingly, occupations with the highest demand are professional roles, technicians and trade roles and also clerical and administrative. The trio discuss how this is likely to play out once hybrid work from home models flourish and international migration resumes to pre-COVID levels.
  5. Our ageing population and high-risk regions. Cate shares the regions that have a large population of their work force represented by those aged between 55 and 64. The impending problem for these regions is a decrease in workers as this segment moves into retirement or scaledback hours. The trio discuss why retiring in a regional location is so attractive, and why state and local governments will have a challenge on their hands to try to encourage mature-aged workers to remain in the workforce for longer.
  6. Each region is an individual market. For the last two years, growth in Australia’s regions have been the headline story, outstripping capital growth in the nation’s capital cities. But is the move to the regions sustainable? As the case of the Gold Coast shows us, regions have a tendency to experience a flatter period of growth after a prolonged period of migration. However, it’s evident that some locations will continue to thrive and grow. For any listeners pondering whether to invest in a regional area, it’s critical to do your research and home work before taking the plunge.

Resources

Show notes

  • New migrants
  • We have hovered between 1-2.2% year on year growth for the last twenty years but the last two years have plummeted to close to 0%. That had an enormous impact on a lot of things – employment, universities, capital city markets with smaller dwellings. There is more to the stats than new arrivals, we had returning expats and new births. 
  • When we think about the cities that were earmarked for growth, they have a higher concentration of new migrants.

  • People moving out of capital cities, no surprises Melbourne 
  • It’s very hard to put a finger on the pulse and say why the moves came about – covid or some people already thinking of moving. People will start to move when housing affordability bites and opportunity presents itself in regions.  
  • Loss of 32,000 in Melbourne in 2021, Sydney lost almost 20,000. Melbourne was on the road to overtaking Sydney for the most populated city.  
  • Centre for Population – by 2024-2025 – net overseas migration will have returned to pre-pandemic levels in Melbourne. Along with a significant fall in the net numbers of leavers, the city will again be the fastest growing capital, and by June 2030, the nation’s largest city. 
  • A lot of state government fueled infrastructure spending – rail upgrades, gearing us up to be a bigger city.  

  • Regional Australia job vacancies 
  • The five regions with the biggest jumps in vacancies in February 2022 compared with February 2021:  
    • Geelong & Surf Coast up by 61%  
    • Ballarat and Central Highlands up by 46.9%  
    • Outback Queensland up by 41.5%  
    • Gosford and Central Coast up by 39.8%  
    • Sunshine Coast up by 39.1% 
  • Jumps in job vacancies are putting pressure on the businesses in areas that have seen an influx of new people.  
  • How will it play out? Locals buying in Geelong and Ballarat – interest rates are so low, for some people it’s cheaper to buy than rent. Investors coming back, they don’t do the home work, they just look at the headlines. People knee jerk and don’t realise that they’re jumping on the bandwagon at the tail end.  
  • People making working from home work, even when hybrid models are introduced.  
  • Different feeling about regions that are 2 hours and more away – but there has been an uptake of 1 and 2 bedroom units in the city so that they can continue to work from home in a regional area.
  • In terms of the occupations being demanded, vacancies are largest for professional roles (24%) of all vacancies in February, followed by Technicians and Trades roles (16%), and Clerical and Administrative roles (14 %). 
  • We’ve lost 160,000 people coming in from overseas. Unemployment target is to have a 3 in front of it. Migrants will start filling a lot of these jobs. But wage growth needs to be sustainable and ideally higher than inflation. Most international migrants do end up living in the cities, but that’s why they’ve put money in the federal budget to encourage migrants to move to the regions (Regional Home Guarantee).  
  • How many people are going to stay and keep moving to regional areas and do a commute a few days a week. 

  • Demographics in the regions 
  • Census data in a few months will provide more insight.  
  • Problem of people engaged in the work force between age 55 to64 is higher than 64% – these areas will experience a drop in workers as this segment moves into retirement. Barossa, Dubbo, Alice Springs, Port Hedland and Mount Isa.  
  • Regions continue to be popular for those retiring – sell city, buy in the country and have a lovely retirement.  
  • Regional Australia Institute: 
  • The 2016 Census shows that ageing is accelerating in many regions but stable in the cities. Since 2011, the median age for both Sydney and Melbourne didn’t budge from 36 while rising in NSW and Victoria from 41 to 43. 
  • The Age Pension is already the largest expenditure item in the Federal Budget at $45 billion annually, and if nothing changes, it is forecast to blow out to an unsustainable $51 billion by 2020. 
  • Victor Harbor, Port-Macquarie-Hastings, and East Gippsland already have 20 per cent or more of the population reliant on the Age Pension. 
  • The move to the regions is not sustainable – this has happened in the past, but not as prevalent as during covid. We’ll see some regional locations and those without underlying economic strength or further away from CBD be flatter for a prolonged period of time. This has happened to the Gold Coast where it was flat for a long period of time after a great period of migration.  
  • What could trigger an area coming off? You have to do your home work and each region is it’s own individual market. 

Gold Nuggets

Cate Bakos – The Property Buyer’s Golden nugget: For any investors who are thinking of approaching the regions, after you’ve done your homework and decided it’s the right place to park your money. It’s very important to work out what the locals like. When in Rome, you do as the locals do. No good focusing on the things that you like or that capital city dwellers like, without exploring what’s popular for tenants in the region. Ballarat – make sure the house is warm and yard is secure, a powered shed is bonus points. 

David Johnston – The Property Planner’s Golden nugget: Many people may not be aware of the Centre for Population, they are a resource for budding property investors and are the experts in migration, when you’re doing your research for where you want to buy.  

  • Centre for Population is a government department, the purpose is to be the expert on population issues – prioritise engagement, coordination and collaboration with governments, academia, business, community groups and the public.  
  • Draw on knowledge and policy insights from ABS and other state and local governments, to undertake modelling and analysis to transform data to valuable insights. 
  • Ultimately to inform population policy through publications, insights and advice.  
  • They report to the Treasury. 

If you’re looking to get population data, that’s a place to go.  

Market Updates

  1. Victorian’s snubbed by the Federal Government Budget. Looking at the Federal Budget infrastructure spend, it appears that Victoria has been overlooked to some degree. The budget set aside $208.4 million in new money for Victorian infrastructure which amounts to 5.9% of the Federal Government spending on infrastructure projects, while the percentage of the Australian population living in Victoria is 25.8%. Interestingly, money has been earmarked for the East-West link project that was booted by the Andrews government.
  2. A closer look at capital cities that have pulled back on capital growth. Melbourne and Sydney experienced slightly negative capital growth in the month of March. This is expected to continue into April, with two long weekends and a disproportionate increase in listings. Segmenting the market further, it’s evident that the higher end properties in the inner ring and inner east of both cities has taken the hardest hit of late. This is consistent with previous market trends, where the top quartile is often the first to move in a changing market.   
  3. Foreign investment in residential property drops from $10 billion to $6 billion. Critical information left out of this headline is that foreign investment in commercial property has doubled from $39 billion to $82 billion, which in part explains why yields for commercial property have lowered. The Australian property market has been seen by foreign investors as a safe haven and yields may very well drop further if commercial property continues to attract interest from overseas buyers. In light of looming interest rate hikes, diminishing yields could be a major concern. The trio discuss the factors and measures which could dampen foreign investment.

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