Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), & CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he's one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written, yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - author of Things That Make You Go Hmmm, one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, 'MacroBusiness'.

Thursday, 7 July 2016

Long term arrivals lowest since May 2007

Migration slows further

The May 2016 Overseas Arrivals and Departures figures showed rolling annual net permanent and long term migration down by 10.7 per cent over the past year at +267,100, its lowest level in 9 years. 

Recent research has unsurprisingly linked this phenomenon with the end of the resources construction boom - which in turn may be adverse news for regional population growth, as the most populous capital cities continue to mop up an ever greater share of the growth in headcount. 

The slowdown in permanent settlers from Europe has been nothing short of sensational, from several thousand per month before the financial crisis to an anemic 810 in May. And the way the British currency is faring - slumping to a 31 year low - these numbers may be set to decline even further.

Less than a fifth of permanent migrants now hail from Europe, as the share from Asia has mushroomed out to 59 per cent. 


Long and short term demographic statistics can often demonstrate a neat symbiosis, with a slowdown in the economy and thus permanent migration reflected in a weaker currency and in turn an increase in inbound short term arrivals.

And so it is, with short term arrivals booming by 9.3 per cent over the year to May to beyond 7.75 million for the first time. Short term departures are still increasing thanks to near record Australian household wealth, but at a much more sedate pace of growth at under 4 per cent. It's a net boost for the international trade balance. 

The boom is overwhelmingly a Chinese phenomenon, with total arrivals from China, Hong Kong and Taiwan soaring to beyond 1.5 million for the first time on record - a total that has more than doubled in less than five years - notching up another thumping 21 per cent year-on-year increase. 

Why are arrivals coming?

Most short term arrivals still come for holidays (3.85 million), but increasingly they come to visit friends and relatives (2 million), thereby reinforcing the now indelible links with Asia.

Short term international arrivals for the purposes of education totaled 489,800, up by +16 per cent from a year ago, despite a recent blip (perhaps not unrelated to a recent change in rules). 

The new student visa rules will kick in from 1 July, which could lead to a material boost for this sector.

The wrap

Overall, there are some conflicting signals in these data, with a slowing rate of long term immigration, but a greater number of short term arrivals than ever before, particularly from Asia.

On balance it seems likely that total population growth forecasts will undershoot government forecasts - at least for a while - so more understanding of internal and interstate migration will be instructive.

The latest statistics strongly suggested that Brisbane and especially Melbourne are benefiting from internal migration at the expense of Perth, Darwin, and Adelaide (and Sydney too, although population growth in the harbour city is already so high that some migration to cheaper and warmer climes is more or less baked in). 

Central tendencies

Reserve Bank research showed that unsurprisingly "student migrants will be likely to demand housing that is close to universities, city centres and other amenities rather than on the fringe of cities".

Most will rent, at least initially, so the forecast arrivals of hundreds of thousands of student migrants raise interesting question marks about the widely predicted supply overhang of apartments.

It is also noteworthy that Sydney and Melbourne are expected to receive a disproportionate share of net student arrivals with the two most populous states set to absorb more than two-thirds of the total student immigrants (and projected contributions to total annual population growth of around half a percentage point), and Queensland accounting for much of the remainder.