2013 was a stonking year for population growth with the Aussie population increasing by 396,200 persons, with particularly strong population increase in New South Wales (+110,300), Victoria (+107,900), Queensland (+79,700) and Western Australia (+71,300).
However, our analysis shows us that the population growth figure in 2014 will be weaker – and in some states considerably weaker – and we believe that the final population growth figure this year is likely to be closer to 300,000 than 400,000.
In particular, a number of states are in a significant population growth downtrend which we’ll explore in more detail below, following yesterday’s Overseas Arrivals and Departures release from the Australian Bureau of Statistics.
Short-term arrivals record high
As a first point of interest, the number of short-term overseas arrivals in Australia has hit record heights and may soon even be approaching 7 million on a rolling annual basis.
This is of significant consequence over the longer term as Australia becomes an increasingly popular country of choice for visitors and probably long-term settlers too.
Long-term arrivals easing
The number of long-term arrivals in Australia has pulled back to a rolling annual level of just over 700,000, after hitting a record high of more than 790,000 last year.
The monthly figures have shown quite a significant pullback since February suggesting that we are now in an entrenched downtrend of long-term arrivals.
When offsetting long-term departures this equates to rolling 12 monthly net long-term overseas migration of just over 370,000 persons, which is approximately 10 percent lower than the peak levels seen in Australia.
When throwing in the natural rate of increase in Australia as well as other short-term movements, this shows us that we will still experience strong population growth in 2014 at about double the long-term average, but the levels will be quite some way down on what we saw last year.
Settlers by country of birth – fewer Poms and Kiwis
One of the interesting standout demographic trends to note that Brits and and New Zealanders are rapidly pulling the pin on migrating to Australia, with the numbers continuing to decline.
On the other hand, the number of settlers from China and India has been picking up strongly, which could become a significant structural change in our demographic make-up.
There have been countless inciteful comments over recent times about “Asians buying our homes”, “Asians taking our jobs” etc...plus ça change.
I thought I’d run the below rolling 12 monthly chart of settlers by continent over the long run to underscore an important point – over the past decade the “Asians” which people are fingering are often in fact Australians.
The statistics show that Australia is increasingly becoming a country with a population of Asian heritage, and contrary to the widespread beliefs spouted on the internet, not all Aussie-Asian migrants hail from China!
Splitting it down a little, it’s clear that the Asian migrants come from all over Asia, although it’s true that the increase in immigration from NE Asia and South/Central Asia is largely a result of increases from China and India in particular.
Population growth will be very different in 2014
Population growth in 2014 will be very different from what a number of commentators seem to be expecting.
While the numbers jump around a bit and it is not possible to forecast with a high degree of accuracy, projecting forward the trends from previous ABS Demographic Statistics releases suggests something quite different for 2014.
Natural increase in 2014
Natural increase in population we might reasonably expect to remain fairly steady as compared to 2013 at approximately 160,000, implying that this segment of growth will be most heavily focused on the more populous states.
For 2014, we might expect to see natural increase of something in the region of:
New South Wales – 50,000
Victoria – 37,500
Queensland – 35,000
Western Australia – 20,000
South Australia – 7,500
Other – 10,000
Total – 160,000
Net overseas migration and interstate migration in 2014
Net overseas migration has been very, very strong in New South Wales (i.e. Sydney) and has been tracking very solidly at around 70,000 per annum.
After allowing for adverse net interstate migration of -15,000, New South Wales appears likely to see population growth in 2014 of around 105,000, which is exceptionally strong.
For Victoria, with the rate of net overseas migration having slowed in December 2013 and unemployment rising to 7 percent seasonally adjusted, we expect net overseas migration plus net interstate migration to be slower at approximately 50,000 in 2014, leading to a total state population growth for 2014 of 87,500.
Queensland is a major beneficiary of net interstate migration seeing +7000 in 2014 which we may expect to continue.
However, net overseas migration to the sunshine state dived in the December 2013 quarter. It’s not yet clear whether that was a rogue print or the beginning of a trend.
The slowing of total net overseas migration to Australia over the last six months suggests that it could be the latter, in which case total population growth could slow to around 60,000 in 2014 from nearly 80,000 in the prior year (generally, we take the conservative projections here).
Net overseas migration also dived in South Australia in December 2013 and the state also suffers from a ‘brain drain’ and adverse interstate migration via a of around 4000 per annum.
We therefore project that total population growth in South Australia will be weak in 2014, at around 10,000 per annum.
Previously strong interstate migration to Western Australia had dried up almost completely by the end of 2013.
Meanwhile net overseas migration is likely to pull back in 2014 quite significantly as the mining boom peaks – we expect significant declines from 45,000 in the prior year, to perhaps only half of that figure in 2013.
This is a highly unpredictable figure to estimate, but Western Australia’s population growth, which was rampant in 2013 at 2.9 percent, could potentially dive to as low as 40,000 this year.
And you can essentially throw a blanket around the rest, with the other states adding perhaps 7500 persons between them.
Total Australia 2014
Totting that up, we could see:
New South Wales – 105,000
Victoria – 87,500
Queensland – 60,000
Western Australia – 40,000
South Australia – 10,000
Other – 7500
Total – 310,000
Clearly these figures will not be accurate, as they cannot be, but they are the best projections we can come up with given the available information and it will be interesting to see how the 2014 actuals track once they begin to roll in.
Where will the population growth happen?
Finally, where is the population growth actually take place?
Please do not be head faked by commentary which suggests that the cities are becoming less centric in nature, because they are not. In fact, all of the available evidence proves precisely the opposite is true.
The major cities are becoming “self sustaining job magnets” and the population growth is taking place increasingly in inner and middle ring suburbs of the four major capitals, while regionally population growth is lagging badly.
Note how the change in population density was becoming ever more centrally focused over the half decade to 2011.
And jobs density shows the same picture.
As was the change in jobs density from 2006 to 2011, which was ever more closely focused on the large city centres.
The result of this is that house prices continue to rise faster in suburbs closer to the city centres, and particularly in the lager cities.
All of the available evidence could not be more clear on this point.
Meanwhile small cities and regional centres are now struggling because the great household debt binge which ran for 15 years from the early 1990s has long since finished circa 2006.
This has always been my viewpoint because I learned a huge amount from my experiences in a more mature city (London).
However, since I may suffer from confirmation bias, I would urge readers to consider what independent studies from the Reserve Bank of Australia (RBA) have found. And for that matter, consider what the Grattan Institute found as well.
Very conclusive indeed.