This article is by Professor Amanda Davies the Head of UWA's School of Social Sciences.
With a housing crisis in full swing and ongoing skills shortages, will WA continue to have Australia’s fastest growing population in 2024?
New data from the ABS has confirmed that Western Australia is the fastest growing state, with a 3.1 per cent growth rate — which is very high.
While the economy is booming as a result, there have been pain points as the State has absorbed higher than anticipated growth.
Residents have experienced increased pressure on key infrastructure, additional demand for health and education facilities, and housing shortages.
In 2023, Perth recorded the tightest vacancy rate of any Australian capital city. While the link between the housing market and population growth is a little complex (and more so because of some of the post-covid corrections occurring in population flows), it is safe to say that as the population has grown, supply has not kept up.
The housing crisis, as well as increased pressure on health, education and social services, has some questioning if the population is growing too fast, and when the population growth will start to slow – will WA get a ‘breather’ on growth so the infrastructure can catch-up?
To answer these questions, it is important to consider what is causing WA’s rapid population growth and what policy levers, if any, can be pulled to affect change on population growth.
Why has WA’s population grown so fast in 2023?
Western Australia’s rapid population growth has resulted from higher than anticipated net internal migration and higher than anticipated international migration. For the past two years, WA has been adding between 2,500-3,500 residents each quarter through interstate migration.
While 1000 people a month being added to the State’s population might not seem huge, over a few years the impacts become increasingly visible – a few more members at your local gym, a few more cars on a Sunday morning at the IKEA car park, a bit more competition at the local childcare for a spot and so on. It all adds up. WA has grown.
While the rate of net internal migration was higher than anticipated, the biggest factor driving growth in WA has been international migration. In the year to June 2023 (which is the most recent data), WA added 61,500 international migrants. Before COVID, WA added about 25,000 international migrants per year. So that is a pretty significant change.
To understand why WA has experienced such a high rate of international migration, and if this is likely to continue, it is important to consider the Australian migration system and the impacts of COVID.
Australia’s migration system is highly regulated, and with permanent migration pathways capped, normally migration rates can be easily projected. COVID interrupted this.
In 2019, pre-COVID, Australia’s annual net international migration was projected to be about 237,000 per annum between 2020 and 2025.
During 2020 and 2021, Australia’s migration rate plummeted due to border closures. As international borders re-opened migration quicky recovered. But by September 2022 the rate of net migration had moved well past projections, sitting at 320,000 per annum. By June 2023 the net international migration rate was recorded at nearly 520,000 per annum.
A good part of the much higher than projected international migration can be attributed to a post-COVID correction – people who delayed their travel to Australia are now coming.
COVID has caused concertina effect in the migration flow - those who delayed their travel in 2020 and 2021 coming to Australia being added to the near normal intake for 2022 and 2023.
However, increased migration arrivals is only part of the story. What is really interesting is the decline in temporary migrants leaving and the impact of this.
Migration data pre and post COVID has revealed this decline is not primarily related to COVID interruptions.
An investigation into the migration system has revealed some loopholes in the temporary migration pathways that have enabled temporary migrants to remain in Australia on an almost permanent basis. This has not been planned for (understandably) and so is creating considerable pressure on the system.
In response, Australia’s new Migration Strategy aims to substantially reduce the number of temporary migrants remaining for a long period in Australia and return temporary migration levels to about pre-COVID levels.
Population Forecast for 2024
The impacts of COVID on migration flows are still playing out in the Australian population, with, for example corrections to international student markets still in play. So, with my excuse for getting anything wrong in place, it is plausible to project that the very high rate of population growth will continue into 2024.
Considering natural population growth, birth records for 2022/2023 suggest WA’s fertility rate is currently sitting a little lower than expected, which could indicate that the natural growth rate will decline.
However, the data are always best looked at over two to three years due to some inherent delays in reporting of the underlying data. So, while it does appear that birth rates are declining, it is entirely plausible that the fertility rate, and natural growth rate, are stable.
Considering interstate migration, the unexpected net migration is being driven by the strong economy in WA and also some ‘push’ factors operating in major east coast states, and in particular high costs of living and housing.
All things staying the same, it is probable that 2024 will see little change in interstate migration, with WA continuing to attract more population than it loses.
Considering international migration, proposed actions tied to the Migration Strategy, such as new visa categories for skilled permanent and temporary migrants provides real potential that there will be an observable shift in international migration flows.
Given the strength of WA’s economy and the very high demand for highly skilled labour, with time, it is reasonable to expect that WA will see an increase in international skilled migration, both permanent and temporary. However, it will take some time for any changes from the new Migration Strategy to be observable.