Australia's rampant population growth to ease

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After racking up record population growth over the past two years, Australia's population boom is set to slow considerably in 2010/11 and 2011/12 according to a new study.

BIS Shrapnel said national population growth will slow to about 1.5% in 2010/11 and 1.3% in 2011/12 as net overseas migration declines from record highs.

"Most of the rise in net overseas migration over the past three years has been the result of a surge in the number of long-term visitors, not permanent migrants," said Jason Anderson, BIS Shrapnel's senior economist. 

BIS Shrapnel said there have been two main groups behind this rise in long-term visitors - skilled workers under Temporary Business (Long Stay) visas (the 457 category), and international tertiary education students.

"We should expect to see some dampening of household spending growth but there should also be some alleviation of inflationary pressure that has resulted from the strong demand growth for domestic goods and services," said Anderson. "In terms of the housing sector, shortages will remain and there will be less upward pressure on interest rates."

BIS Shrapnel said even with lower population growth, the rate of new dwelling construction will remain below underlying demand, so shortages will persist and rental markets will stay very tight.


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