Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Tuesday, 26 July 2016

Population growth materially underestimated (400,000+)

Population growth underestimated

Some interesting demographics news!

If you've been reading this blog for a while, you'll know that I've been suggesting since last year that the slowing population growth narrative is likely to be misguided.

You'll know that because I've mentioned it ad nauseam for months, and indeed every month at the time that the Overseas Arrivals and Departures figures have been released!

My basic contention was explained in more detail here last year - although student visa issuance and uptake had initially been slower than expected, I argued that this was likely just a lag, and eventually a flood of international students would lead to a resurgence in population growth. 

The demographic statistics lag a little, but recent figures have suggested that the collapsing population growth narrative hasn't been quite right in any case.

Annualised population growth

Year to March 2015 - 316,000

Year to June 2015 - 317,100

Year to September 2015 - 313,200

Year to December 2015 - 326,100

Enrolments booming

In May this year I wrote at Business Insider how Chinese and Indian international student enrolments in Australia have boomed. 

Particularly into Sydney, Melbourne, and south-east Queensland.

And every month, I make the point that short term education arrivals have been increasing at a year-on-year pace of about 20 per cent.

A key point of note is that those arriving for courses of one year or less are not recorded in the immigration figures, only as short term arrivals. 

But as a Brit that arrived on a one year visa myself in Australia back in the 1990s, I know from experience that many short term arrivals either end up staying on a new or extended visa, or finding a different way to return to Australia soon after their departure. 

I've floated these theories with everyone from senior economists to taxi drivers and shoe-shine boys over the past year, mostly gaining underwhelming traction.

UBS weighs in

But wait! 

Scuttman over at Business Insider reports that UBS have put out a research note arguing that ABS population growth figures have failed to capture international students on shorter term courses, while record tourism arrivals have also bolstered the number of people in the country at any one time:

"UBS suggests that population growth - essentially the number of people in the country at any one time - has actually accelerated in recent quarters, rising at around 1.7 per cent per annum in the past 12 months."

Bingo! My point exactly. 

The UBS estimates imply an actual increase in headcount of well over 400,000 over the past year. 

One thing I'd add though is not to take my word for it. Take a look around you in the capital cities at the number of Asian students and tourists. Does it look to you like population growth is really slowing up?

The wrap

A final point to note is that these trends are likely just at their beginning. 

As I explained in more detail here, effective 1 July visa rules were relaxed to allow primary school students and their guardians to apply to study in Australia.

Early indications suggest the uptake in time could be massive.