Issue 17 | Thursday 25 August 2022 | Unemployment and its Link to Real Estate
Hi Andrew Bell here, as viewers of this fortnightly report you know that I talk about the five fundamentals that drive real estate and one of the key points is the unemployment rate.
It’s no secret about the fact that Australia’s current unemployment rate is 3.4% at an all-time 48-year low, which is a great underpinning for the real estate market. Not only does it mean that there is less nervousness about job security, but it also means there is upward pressure on wages. Whilst that’s not what you are hearing in the media across the board in so many private sector jobs employers are recording significant wage growth because the lack of applicants means they have to offer higher wages to attract people and higher wages to retain staff.
This low supply of available workers has translated to almost a third of businesses struggling to find suitable employees. I will touch on that in a moment. The biggest problem of all is that most businesses attribute their struggles to get employees down to applicants not having the required skills. This widespread difficulty in finding suitable labour indicates the hundreds of thousands of job vacancies that exist in Australia at present are just as much a labour shortage problem as it is a skill one. This lack of suitable workers has put a break on production impacting the resilience of supply chains and the ability of companies to grow. It’s a real problem.
The five sectors that have been hit the hardest are trade, hospitality and tourism, healthcare, manufacturing, and technology.
Now the most obvious solution to fixing Australia’s skills shortages is increasing migration, but it’s not as simple as that. Australia is suffering from a full year of net international travel restrictions where net overseas migration, which counts for people who have arrived in or departed from Australia for longer than 12 months was a net outflow of 88,800 people for 2020 – 2021 financial year. That was the largest number of people leaving Australia since World War I. Student Visa holders contributed most to the dip, followed by working holiday makers or as we call them backpackers.
Australia’s long-term arrivals have almost reached net zero again in the past quarter and are estimated that net overseas migration is not expected to reach pre-pandemic levels at least for another 12-18 months.
It is a little encouraging that since March more than 58,000 applications for skilled visas have been lodged. Believe it or not, it takes anywhere from 30 days to longer than 15 months to process temporary skills visa applications, so no quick fix here.
This is certainly adding to our current inflation levels and it’s also putting enormous pressure on businesses, many of which simply can’t afford higher wages and so are really caught in a major bind.
Those in the workforce, can feel security around their jobs and can feel certain that they are going to see wage rises, which is a great underpinning of the real estate market that is often not discussed.
A bit of a holler out as we are only weeks away from this week’s Ray White Surfers Paradise Muscular Dystrophy Ball and we still have limited tables available, whether you would like to come as a business or in a group of friends and take a whole table, or whether indeed you would like to come in smaller numbers of people. It really is shaping up as a fantastic Ball and is rated time and time again as not only the longest-running Ball on the Gold Coast but the most fun, so come and join us.
Meanwhile all the very best as we knock on the door of spring and look forward to our usual strong selling quarter of the year.
Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group
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