Migration to Australia is slowing.
The ABS released its Overseas Arrivals & Departures figures for September 2015 which confirmed that net permanent and long-term migration continued to slow to +282,400 on a rolling annual basis, which is now the lowest level since July 2007.
With New Zealanders and Europeans having increasingly opted to pursue more appealing or lucrative career and lifestyle choices elsewhere, net immigration into Australia is now overwhelmingly being driven by Asian migrants.
Indeed while migration from New Zealand continues to slow and British settler numbers are tracking at their lowest level in decades, settlers from China and India have steadily increased in number to their highest level on record.
Later this week the ABS will release the latest Labour Force figures, which will show employment growth of close to +2 per cent for the past year comfortably outpacing the rate of population growth of around +1.4 per cent.
Meanwhile tourism has become of the fastest growing sectors of the domestic economy. A recent Deloitte Access Economics report noted an existing shortage of 38,000 workers with a projected further 123,000 workers required by the end of the decade, leading inevitably to industry calls for a relaxation of visa rules.
Record number of visitors
The flip side to the slowing of Australia’s economy – and in turn net permanent and long-term immigration – is that the lower dollar has encouraged a record 7.25 million visitors to our shores over the past year, a monster increase of well over 450,000.
What is more the rolling annual number of short term departures is now in decline for the first time since a temporary blip through the financial crisis, as the weaker dollar encourages more Aussies to holiday at home.
This is one of the many ways in which a weaker currency serves to boost an ailing domestic economy.
Indeed anyone looking for evidence of how the weaker currency can help to rebalance the economy need look no further than the below chart, which shows the ratio of short-term departures to arrivals shifting into a long, sweeping downtrend.
The number of visitors from China continues to explode at a breakneck pace being up by an outlandish 27 per cent from September 2014, with more than 1.3 million visitors arriving from China and its provinces over the 12 months to September 2015.
While the rise and rise of the Chinese middle class and tourism – with its associated surge in spending power – is very much a global trend, Australia has evidently been extremely successful to date in capturing its share.
In fact it was announced during the past month that Britain will slash the price of its two year visa for Chinese visitors from £325 to just £85 in a slightly desperate attempt to capture more of this lucrative market.
In a related trend, the lower dollar has also encouraged record education arrivals with a huge surge since 2014 taking rolling annual arrivals to beyond 453,000.
This is another trend which is very much skewed towards students of Asian origin and particularly Chinese students, with 2016 set to be the biggest year on record for higher education visas.
The student visas boom is very much a capital cities phenomenon, which is one of a multitude of reasons that Australia’s capital cities are set to capture an even greater share of population growth over the next decade.
With recent changes to rules and regulations in New Zealand having reportedly curbed Chinese interest in the Kiwi property market, the above demographic shifts have potentially significant implications for Australian real estate over the remainder of the decade.
Anecdotally there has been a renewed rush of interest in Australian property from would-be Chinese investors.
I recently looked in more detail at the student visa boom and some of the potential ramifications here.
A significant share of new arrivals come to Australia for education but stay for the long term on other substantive visas – it’s one the reasons that Chinese investors are so active in targeting Australian property markets.