One area that is facing a longer lasting Coronavirus impact and which will have an important bearing on our housing property markets is migration ﬂows.
Immigration has been a key driver of Australia’s population growth and economic growth, but what happens now that our borders are closed?
The coronavirus is driving the biggest population decline in Australian history, with 300,000 tourists, temporary workers and students already departing this year in an exodus that threatens to deepen a consumer spending slump and hit the housing market.
But recently Westpac chief economist Bill Evans put another spin on this explaining the importance of temporary migration, in particular students.
Here’s what he had to say…
The risks to the economy around net migration are significant.
The Prime Minister recently speculated that net overseas migration was likely to fall by 85% in 2020/21 compared to 2018/19.
Australia’s net migration is dominated by temporary visas (80%) with foreign students representing around 50% of all net migration.
Without overseas migration population growth in NSW might fall to 0.3% from 1.3%; Victoria to 0.8% from 2.0%; Queensland to 1.1% from 1.7%; Western Australia to 0.4% from 1.1%; and South Australia to 0.1% from 0.9%.
The more significant impact on NSW and Victoria particularly represents their relative success in attracting foreign students.
Australia’s population growth have tended to focus on permanent visas with arguments focused on 'protecting jobs'.
But with foreign students dominating net inflows the focus on protecting jobs is inappropriate.
Students are attracted to intermittent casual jobs rather than the traditional full time jobs that are usually in need of 'protection'.
While restricting foreign entry to Australia is one of the most effective ways our island nation can control the virus, governments, along with universities and other interested parties, must immediately investigate all possible means to re-establish Australia as an attractive venue for foreign students.
We are aware that some universities have initiated novel schemes to address the challenge.
Governments should be working enthusiastically to support those initiatives.
Just as we have emphasised the importance of the government’s policies to boost demand, supporting Australia’s population growth is also paramount.
Australia should not accept the prospect of a collapse in net migration.
In particular, severe restrictions on foreign students might permanently divert students to other markets resulting in a permanent loss of a critical driver of population growth.
Indeed we should not really consider the foreign students as part of the population debate.
This is a genuine export sector and any debate around Australia’s net migration intake should be fully mindful of the important export function which a considerable share of net migration makes to the economy.
Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on
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