Pete Wargent blogspot

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

'Huge fan of your work. Very impressive!' - Scott Pape, The Barefoot Investor, Australia's #1 bestseller.

'Must-read, must-follow, one of the finest analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for accurate & in-depth analysis' - David Scutt, Business Insider.

'I've been investing 40 years yet still learn new concepts from Pete; one of the finest young commentators' - Michael Yardney, Amazon #1 bestseller.

'The most knowledgeable person on Aussie real estate - loads of good data & charts...most comprehensive analyst I follow in Oz' - Jonathan Tepper, Variant Perception, 2 x NYT bestseller.

Thursday, 6 April 2017


Employees flocking to eastern capitals

I've spent some time in recent weeks looking at migration and immigration trends.

The capital cities are accounting for an ever-greater share of population growth, now up to 82 per cent, for a huge increase over the past decade from 75 per cent.

And this trend is forecast to continue over the next decade too.

In particular, Melbourne and Sydney are accounting for a record share of the growth in headcount.

A valid question is: why?

There are a number of drivers for the capital city migration, including an apparent desire to live "closer to the action".

The main reason, though, is jobs, with the capital cities creating most of the employment since the peak of the resources investment boom. 

The chart below looks at the number of unemployed persons per job vacancy by state, with the numbers smoothed on a rolling four quarter average basis. 

In New South Wales the ratio has declined to just 3, with job vacancies advertised having hit a record high in H2 2016. 

Victoria has also responded relatively to interest rate cuts with the ratio declining from 6.6 to a more reasonable 4.2. 

Many of the jobs created have been in or related to construction, of course, which may prove to be a transient dynamic.

Tasmania has the highest ratio at 7.8, but the latest figures show that this is about to drop sharply over the next couple of quarters as the outlook improves. 

The problem child is Western Australia, which saw its labour force switch from full employment to an elevated level of slack after the peak of the mining construction boom.

Lately the ratio in WA appears to have been correcting itself, but this is partly because some of the thousands of Aussies that migrated to WA during the boom years are now returning home (or simply heading to the eastern capitals for gainful employment). 

The labour force challenges are generally more acute in a number of the regional centres than in the capital cities.

Most immigrants into Australia naturally gravitate towards Sydney and Melbourne.

Meanwhile within Australia Sydneysiders are now drifting towards south-east Queensland, and residents of Adelaide are lurking across the border into Melbourne.