The Australian Bureau of Statistics (ABS) released labour force data for April 2016 earlier this week.
The data is one of the key economic releases each month and obviously employment is an important factor for the housing market.
Someone that is employed with a high level of job security, working as many hours as they wish is going to be more inclined (and able to) to make a high commitment decision such as purchasing a property.
Conversely, those with less job security and underemployed would be less inclined to purchase residential property.
In April 2016, the national unemployment rate was recorded at 5.7% which was steady over the month and down from 6.2% a year ago.
The national unemployment rate is now at its lowest level since September 2013.
While the unemployment rate was unchanged, total employment increased by 10,829 persons.
When you look at the breakdown between full-time and part-time jobs growth it is clear that -9,324 full-time jobs were shed over the month which was offset by the 20,153 part-time jobs created.
Year-on-year, full-time employment has increased by 83,846 persons or 1.0% while part-time employment has increased by 160,851 persons or 4.5%.
One of the really interesting trends of note over recent years has been the rising prevalence of part-time employment.
With 3,751,560 persons employed part-time, they now account for 31.5% of all employees.
The proportion of persons employed part-time has increased from 30.8% a year ago and 28.7% a decade ago.
The above chart shows how over time part-time employment has become much more commonplace.
While part-time employment is on the increase, it seems that it is not necessarily because Australians want more flexible working arrangements.
Each quarter the ABS publishes data on underemployment and the above chart shows the underemployment rate over time.
The latest data to February 2016 shows the underemployment rate at 8.9% and although it has fallen slightly it is at close to record highs.
While employers may like reducing employee’s hours it seems that for many employees they would prefer to be working additional hours or to be employed on a full-time basis.
In fact, the underemployment rate is currently higher than it was at the time of the last national recession in 1991-92.
Although the unemployment rate is reducing, it is being fueled by substantial growth in part-time employment rather than full-time employment.
The underemployment data indicates that the rising level of part-time employment is not necessarily due to the will of the employees.
Should this trend continue and in the wake of the weakest wages growth on record, it will make it increasingly difficult for people (particularly those that don’t already own a home) to purchase homes.
If we look across the individual states and territories we can see in many regions the unemployment rate is falling.
The current trend unemployment rates are recorded at: 5.3% in NSW, 5.8% in Vic, 6.2% in Qld, 7.0% in SA, 5.5% in WA, 6.6% in Tas, 4.5% in NT and 4.1% in ACT.
The level of employment in clearly a big driver of the performance of housing markets.
Although this data is at a state level, the strong growth in employment over the past year and five years in NSW and Vic correlates with the strong growth in home values in Sydney and Melbourne.
Similarly, as employment growth in WA and NT has slowed, so too have the housing markets in Perth and Darwin.
Tasmania has been the weakest jobs market in the nation for the past decade and unsurprisingly home values in Hobart have also shown the lowest level of growth.
Housing is generally the single biggest purchase most people will ever make and the mortgage repayments on a house typically account for the highest proportion of household expenditure.
Therefore a strong jobs market in which people have stable employment, are not underemployed and have the prospect for increasing wages is generally imperative to drive housing demand.
This also helps to explains why Sydney and Melbourne have seen so much growth in home values over recent years while the other capital cities have seen their capital growth performance languish.
Furthermore, the employment story explains why lower property prices alone are not enough to lure people out of Sydney and Melbourne.
While cheaper housing is undoubtedly attractive, the fact that employment growth and therefore opportunities have been much weaker outside of the two largest capital cities hinders people from having the confidence to move interstate.
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