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Is there a mass exodus from Sydney?

Further interesting news from the 2016 Census has been released.

briefcase1Some of it is rather open to interpretation.

For example, there was lower employment in the younger age bracket, comprising 15-24 year olds.

But, on the other hand, 22 per cent of the population now have a degree or higher level of qualification.

That’s up +3.2 per cent from 2006-2011, replicating the same percentage increase as five years earlier, according to ID, the population experts.

Employment opportunities were certainly curtailed by the financial crisis and resources downturn, but we’re also studying longer, so it’s a somewhat mixed picture.

Exodus! 
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Similarly, there’s quite a bit been said on the apparent mass exodus from Sydney.

Again, there’s a strong element truth to this story.

But it’s equally important not to take away the wrong visual image from this.

The fact is, New South Wales always loses people interstate, and it always will, largely to Brisbane, south east Queensland, and even to Melbourne.

In reality, though, the numbers leaving the state on a net basis were dramatically lower in the 2011-2016 Census period than they were in the preceding five years.

And they were much, much lower than they were in the five years before that, with net interstate migration tracking at way under the half the rate of seen from 2001 to 2006.

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To the regions…

Now it’s true that more people, especially Baby Boomers, have been taking their newly-boosted Sydney equity to move out to regional New South Wales, such as to the Hunter Valley, or to the South Coast.

However, this has been offset by a marked increase in immigration to Sydney, as migrants seek employment opportunities.

The harbour city of Greater Sydney is growing at a faster pace than previously, probably now at somewhere close to 100,000 per annum, which is well ahead of the decade average.

This will presumably continue for as long as Sydney continues to create record job openings.

briefcase1The net impact of this dynamic – high immigration and resident Sydneysiders moving outwards or interstate – is that Sydney has a substantial foreign-born population (which now comprises more Chinese-born residents than British-born, a remarkable statistic in its own right).

There’s plenty of disingenuous ‘analysis’ of the capital city economies, focusing on resources exports and ignoring services exports, for example, while also ignoring Australia’s record levels of household wealth and the comparative improvement in standard of living for so many immigrants.

The Productivity Commission (“PC”) has delivered another long report on the importance of the large cities to Australian wealth, and why services industries and employment growth fare best within them, in part due to proximity to other businesses and labour supply.

The fact is that over the most recent year Sydney (38.6 per cent) and Melbourne (28.4 per cent) have unsurprisingly dominated contributions to Australia’s GDP growth, according to analysis by Terry Rawnsley of SGS Economics & Planning.

Challenges abound

All of the above having been said, it’s reasonable expect to see interstate migration to south east Queensland accelerating again over the next five years. queensland brisbane city water sky QLD map state capital australia

One of the most noteworthy challenges identified by the PC is that about 60 per cent of new jobs are created within 10 kilometres of the Central Business Districts, but housing supply in those locations is not keeping up with this pace of growth by about half.

The PC found that most jobs that can be reached within 45 minutes by car are located in the inner city, while on the city fringe this is the case for fewer that 20 per cent of jobs.

By 2050 an additional 10.8 million people are projected to be living in Australia’s capital cities, as well as an extra 2.4 million people in the non-capital city areas.



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About

Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog


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