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Thursday 11 April 2019

This is why Australia's airports are busier than ever

Record inbound migration

February is typically the busiest month of the year for permanent and long-term arrivals into Australia.

And this February was the busiest of all busy Februarys, with some 121,300 arrivals in just a 28-day stretch.

This took annual long-term arrivals up to 844,800, the highest ever figure and an increase of 7.3 per cent from a year earlier. 


So while there has been talk of tinkering with migration policies, at the coalface little has changed meaningfully in terms of inbound arrivals. 

China boom changes shape

The seasonal adjustments for Lunar New Year are often a tricky affair given that the celebrations don't fit neatly and conveniently into a single month.

Well over ¼ million short term visitors came to Australia from China, Taiwan, and Hong Kong over the celebratory month of February, but this was a little less than in the prior year. 

It wouldn't be a surprise to me if the China boom was slowing a bit now: we've made visiting less enticing, while China has tightened its capital controls. 

Although short-term arrivals have soared to beyond 9¼ million, it appears that the tourism boom is now slowing, with fewer visitors inclined to note that they're in Australia for holiday and more citing a visit to friends and family. 


Given recent migration trends and the greater share of visitors hailing from Asia, this is likely to be a net positive for demand in Melbourne. 


Finally, February was also the biggest month on record for international education arrivals at 121,300, for a substantial year-on-year increase of 9 per cent.  


There's an epic shortage of student-friendly accommodation looming as both international and domestic student enrolments have mushroomed and developments have failed to keep pace. 

The wrap: rental tightening

Australia has been through a record residential construction boom, but this is now slowing just as inbound migration patterns are busting out new shapes. 

Housing demand for rentals is a little different than it was in previous cycles, with more short stay lets and more focused demand on employment hubs, so I believe we'll likely see a notable shift towards Airbnb usage or similar platforms. 

I also expect we'll also see rental vacancies tighten to below 2 per cent this year, the lowest level since 2013, with only Sydney materially pulling the national figure higher as it ploughs through its final avalanche of apartment completions