Australia's commodities boom has gone bust. But what a ride it has been. All the activity fueled another boom, international migration:
[Adelaide University demographer Professor Graeme Hugo] says migration has been a defining feature of Australia’s story during the past three decades.
‘‘The demography of few countries has been as strongly affected by international migration as Australia. Net migration on average has contributed around half of Australia’s population growth over the last 30 years.’’
In the early 1980s, the transformative era of Asian migration had only just begun, with the arrival of refugees from Indochina. Since then, Australia has experienced a surge in migrants from south-east Asia, China and India, as well as from the Middle East and Africa. The 1981 census found 20.6 per cent of the population was born overseas, but that had risen to 26.1 per cent by 2011.
Emphasis added. Migration itself drives economic growth. Las Vegas is a good example of such a bubble. People arriving need housing. Construction meets the demand, creating new demand for construction workers. Laborers move to Vegas to fill those positions and need housing. The feedback loop takes a strange turn:
Residents of some cities appeared to be playing a game of musical chairs. In Las Vegas, for instance, one in five residents moved somewhere else in town between 2008 and 2010, says Stoll. And local moves spiked highest in metropolitan areas like Vegas, where unemployment surged and the housing bubble burst.
Since 2010, the total labor force for Las Vegas has flatlined around 1,000,000 workers after years of dramatic growth. That suggests that there isn't any new demand for housing. NPR story from last summer:
High-paying investors have helped Las Vegas' real estate prices to bloom in a place that once ranked as the country's foreclosure capital.
Thanks to these big-money investors as well as a shortage of supply, the median price for a single-family home in Vegas is up 32.8 percent from a year ago, according to the Greater Las Vegas Association of Realtors.
The housing market is so tight that Realtors are calling people to try to get them to sell their homes. Agents are always trying to find homes to sell, but right now in Vegas, it's taken on a new fervor.
Relocation from one side of town to another can give the appearance of a robust real estate market. But the perceived rebound is a mirage. The Sun Belt is full of such demographic illusions. Everything is peaches and cream until the migrants stop coming. The end is nigh, Australia:
New Zealand gained a net 3,000 permanent and long-term migrants last month, the most since June 2003.
It pushed the annual net inflow to 17,500, in contrast to a net loss of 2300 the previous year and well above the average gain of 11,300 over the past 20 years.
The turnaround is largely explained by a reduction in the net loss of people to Australia, which at 23,500 in the year to October was 15,800 fewer than the year before. ...
... "Net immigration is now clearly on a cyclical upswing, partly due to more people moving to Auckland and Canterbury, but mainly due to fewer people moving to Australia as job prospects there have cooled," said Westpac economist Felix Delbruck.
"We expect net immigration to peak at over 30,000 next year, which would make this the biggest migration cycle since the early 2000s. The upturn in migration is a significant reason why we expect house prices to keep rising next year, albeit at a slower pace, despite lending restrictions and higher mortgage rates."
The migration pendulum swinging from Australia to New Zealand isn't a long-term problem. It can swing back if demand for commodities picks up dramatically. But what if there are more attractive options elsewhere? What if New Zealand's economy provides better jobs than those available in Australia? What if, thanks to a declining birth rate, there are less people itching to move? Immigration might never come back to Australia at the level it has been at over the last three decades. Many native Australian would likely welcome the change. Places drunk on migration are looking at a wicked hangover given demographic and economic trends.