Australia’s stagnant population growth is the biggest bottleneck for a long-term economic recovery, the real estate industry says.
“The government has been monitoring a remarkable economic recovery, but budgetary statements reveal that population growth will soon become an anchor for our economy,” said Australian Real Estate Council CEO. Ken Morrison said..
Currently, Australia’s population growth rate is about 0.1%. However, due to net migration, Australia is estimated to lose 97,000 by the end of 2020-21. This is the largest net loss in overseas migration since 1916.
But Morrison believes that lack of growth “catch up with us” as expectations for economic and job growth are lower than expected.
“Population growth is not an additional option for the Australian economy. Without it, we cannot sustain financial success in the long run,” Morrison said. “If safe immigrants are not reopened until 2022, Australia is at risk of losing to competitors as students and high-value workers take advantage of other opportunities.”
Housing market slows due to slowing population growth
Nevertheless, the PCA states that domestic demand for housing is driving record high growth in the sector from public interest rates of nearly zero percent.
Housing supply remains a market issue, so the Treasury said in its 2021 budget outlook:pdf) Due to the slowdown in population growth, the recent strength of the housing market is not expected to be maintained.
“The slowing population growth is expected to limit demand for high-density housing over the next few years, so the recent strength of housing market activity is not expected to continue,” the Treasury said. ..
Lack of immigrants can lead to wage growth
Australian Economics Dean of Commonwealth Bank Gareth Aird believes the lack of immigrants will have a positive effect as the labor market shows signs of rising wages (pdf).
“Wage growth will be very weak … but it’s not surprising to see some pockets of wage growth due to the sudden drop. [net overseas migration] Companies can’t hire workers from abroad, “said Air Do.
“The bottom line is that if labor demand exceeds supply, local workers have the opportunity to demand higher wages.”