What influences net overseas migration in Australia?

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What influences net overseas migration in Australia?

Net Overseas Migration

Positive net overseas migration can increase demand for housing and subsequently place upward pressure on house prices. There are a number of factors which influence net overseas migration.

What is net overseas migration?
Net overseas migration has been the major contributor to population growth in Australia since 2012, when natural increase was surpassed as the dominant contributor to population growth. Net overseas migration figures are released quarterly by the Australian Bureau of Statistics and include all temporary and permanent residents who have remained in the country for at least 12 months in the previous 16-month period.

Net overseas migration = in migration – out migration

Net overseas migration is extremely important to the Australian economy. The migration program helps to shape the future of Australia and off-set the ageing population. The majority of permanent visas are granted to skilled working-age individuals, while international student  enrolments (one component of net overseas migration) generate the third largest export in Australia – education. It is estimated that net  overseas migration will contribute 1% per annum to GDP growth over the next 30 years.

Government policy impacts on net overseas migration
Of all the factors which may influence net overseas migration, Government policies appear to have the largest impact. Policies can either encourage or discourage overseas migration.

In terms of permanent migration, the Government determines a ‘cap’ for migration every year during the Budget process. This cap is known as the Migration Program Planning Level. Since the 2012/2013 financial year the cap has remained at 190,000.

Until 2016/2017 the program outcome matched the planning level, however the outcome has fallen short of the planning level in the past two years. In any given year the Government is able to reduce the program outcome without actually reducing the ‘cap’. This can be achieved by making eligibility criteria for visas stricter, delaying processing of applications, and refusing applications that are not considered genuine.

While there are no caps enforced for temporary migration, a range of factors influence the number of temporary migrants each year. The two largest components of temporary migration are student visas and temporary work visas.

Students visas, which has made up almost half of all of temporary visas in the past few years, are influenced by how easily permanent residency can be achieved following studies, safety considerations, the strength of the Australian dollar, and competition from other overseas educational providers. It would appear that the biggest factor is the ease/difficulty in becoming a permanent resident.

Temporary work visas tend to increase when there are unfilled job vacancies in Australia, such as during mining booms. During the mining boom in the 2000s net overseas migration increased significantly, and subsequently dropped after the boom ended.

Net overseas migration figures show us that the Australian population is growing strongly and is likely to continue at least for the near future. We can expect that demand for housing in Australia will continue to increase for as long as overseas migration increases.

While net overseas migration figures tell us how much the Australian population has grown, these figures provide little insight into change in population and housing demand at the state, city or suburb level. Where overseas migrants settle and why will be discussed in a future article.