Record migration to fuel housing investments

By Nila Sweeney

Australia has become the land of opportunity for more than 430,000 overseas migrants, with international arrivals to March this year accounting for more than half of the nation's population increase.

Australia's net overseas migration of almost 200,000 people represents an all time high, reports the Australian Bureau of Statistics (ABS).

In the twelve months to March 2008, 430,000 overseas migrants arrived and 230,000 departed, an average of 1,180 overseas arrivals and 630 departures per day.

It can't be stressed enough that Australia's migrant boom is "a big deal", said Savanth Sebastian, equities economist with CommSec.

"The remarkable lift in Australia's population has significant consequences for the economy, as the faster rate of population growth means that the economy can grow at a faster pace," Sebastian said. "However, all the extra people also put greater demands on our economy. Extra productive capacity is being added, but it carries with it some extra inflationary risks."

A whole raft of companies will benefit from this population growth, Sebastian added.

"More people are coming to our shores, but we are not building enough homes," Sebastian said. "The strength of Australia's population growth points to the likelihood of strong housing construction in 2009. Building material companies, developers, retailers and banks have potential to gain from the lift in housing activity."

In March 2008 Australia's population reached 21,283,000, an increase of 1.6% (336,800 people) from the previous year.

WA recorded the fastest population growth at 2.6%, followed by Queensland and the NT at 2.2%. Victoria grew by 1.7%, the ACT at 1.4%, SA and NSW at 1.1%, and Tasmania 0.9%.

The strength and growth in population will continue to put further upward pressure on the demand for housing, and while the supply of housing remains far short of demand, "we are seeing that the housing sector is slowly starting to build more homes".

"The rental market is the tightest in 18 years and can't get much tighter," Sebastian said. "The strength in rental yields and a more uncertain outlook for the share market is likely to see more investment in housing over the coming months."