Slowing Migration Could be Bad News for Construction

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Tuesday, September 29th, 2015
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The slowest rate of population growth in 10 years and slowing rates of migration could spell unwelcome news for the construction sector in Australia not only in terms of reducing demand for new housing but also due to a slowing inflow of foreign workers to fill rising vacancies in some residential construction trades.

According to new ABS data, a 16 per cent drop in net migration levels (overseas arrivals minus overseas departures) has helped contribute to a decline in the overall growth rate of Australia’s population over the year to March. The country’s population grew by just 316,000 people, or 1.4 per cent, to reach 23.7 million people over the year to March 2015 – the slowest pace of population growth in almost 10 years.

Reflecting the changing structure of the nation’s economy, meanwhile, domestic migration toward eastern states has seen Victoria and Queensland gain through net interstate migration, while the Northern Territory recorded its biggest ever loss in this area and Western Australia registered its first net interstate migration loss in more than a decade.

The drop in net migration levels is concerning for the construction sector both in terms of what it signals in terms of demand for housing and the supply of inbound skilled foreign workers into construction trades.

In terms of demand, the data suggests the effect of abnormally high rates of growth in population Australia has seen over the past decade as a driver of housing demand may be fading – especially in the Northern Territory, South Australia and Tasmania where the population is hardly growing at all.

From a workforce perspective, it appears to signal the prospect of lower levels of new foreign worker supply at a time when demand for mining and civil engineers has dropped off but that for tradespeople such carpenters, plumbers and air-conditioning mechanics is on the rise.

Indeed, compared with the previous year, the number of foreign workers coming in to work in the Australian construction sector on 457 visas throughout the 12 months to March was down by 12.7 per cent, immigration department figures indicate.

Moreover, over the next five years, Department of Employment projections suggest, the nation will need 18,700 new carpenters and joiners, 13,900 new electricians and 11,200 new plumbers as well as 9,600 new engineers and 13,800 new construction managers in the professional side of the industry – needs which will be difficult to meet in absence of a substantial increase in training effort should the inflow of foreign workers continue to drop off.

In terms of states, Victoria has taken the lead in terms of national population growth, registering a 1.7 per cent year-on-year increase in front of New South Wales and Western Australia (1.4 per cent each) and Queensland and the ACT (1.3 per cent).

Population growth is weakest in the Northern Territory (0.2 per cent), Tasmania (0.3 per cent and South Australia (0.8 per cent).

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