{"id":1463,"date":"2022-01-11T10:25:26","date_gmt":"2022-01-11T10:25:26","guid":{"rendered":"https:\/\/royabhishek.in\/urbanbuyer\/look-whats-going-to-happen-to-australias-property-markets-over-the-next-40-years\/"},"modified":"2022-01-11T10:25:26","modified_gmt":"2022-01-11T10:25:26","slug":"look-whats-going-to-happen-to-australias-property-markets-over-the-next-40-years","status":"publish","type":"post","link":"https:\/\/royabhishek.in\/urbanbuyer\/look-whats-going-to-happen-to-australias-property-markets-over-the-next-40-years\/","title":{"rendered":"Look what\u2019s going to happen to Australia\u2019s property markets over the next 40 years"},"content":{"rendered":"

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You\u2019ll never believe what\u2019s going to happen to Australia\u2019s property markets.<\/strong><\/p>\n

Now I\u2019m not talking about tomorrow, or next month, or next year.<\/p>\n

\"Multiple<\/p>\n

Of course that\u2019s the focus of much of the media at present \u2013 what\u2019s going to happen to our property markets in the short-term.<\/p>\n

But strategic investors have always had a long-term focus.<\/p>\n

So if you\u2019re worried about the future of our property markets take heart \u2013 earlier this year the\u00a0Intergenerational Report<\/a> (IGR) forecast that Australia\u2019s population will be 38.8 million by 2060-61,<\/p>\n

And if you think about it\u2026to deal with the projected population growth between now and 2061 it\u2019s likely we\u2019re going to require one new property built for every two properties that currently exists!<\/p>\n

Even though these projects are a little lower than previous projections \u2013 due to Covid slowing things down \u2013 this still means Australia\u2019s population is projected to grow faster than most other developed countries.<\/p>\n

\"Chart01\"<\/a><\/p>\n

Despite the reduction of the projected population, these trends are truly monumental.<\/span><\/h2>\n

If you think about it, it\u2019s taken Australia well over 200 years since European settlement to reach a population of 25.5 million people today.<\/p>\n

But in the next 40 years, our population will increase by around 13.3 million people.<\/p>\n

In other words, it will increase by over 50%!<\/p>\n

To make this worse, currently, there are 2.5 people in each household, but the IGR forecasts the average number of people in each household will shrink a little moving forward, meaning we are going to require about a third more real estate than we currently have.<\/p>\n

All this means our way of living is going to change considerably and town planners will struggle to cope with this growth.<\/p>\n

Of course, this will impact property investment choices, but strategic, knowledgeable investors will be well-placed to capitalise on the changing trends.<\/p>\n

The biggest demographic challenge<\/span><\/h2>\n

Australia\u2019s greatest demographic challenge is likely to be our aging population caused by increasing life expectancy and falling fertility rate.<\/p>\n

\"Chart02\"<\/a><\/p>\n

As our population ages, there will be fewer people of working age relative to the number of older Australians.<\/p>\n

\"Chart03\"<\/a><\/p>\n

This presents long-term economic and fiscal challenges similar to those faced in most comparable countries.<\/p>\n

\"Chart04\"<\/a><\/p>\n

Migration will play an important role in offsetting this demographic challenge by delaying the effect of the aging population as well as providing more tax-paying residents.<\/p>\n

However, migration is not a complete solution to the challenges associated with aging given migrants also age, meaning migration needs to be managed well to ensure it continues to support higher living standards.<\/p>\n

Who\u2019s going to pay for all these older Australians<\/span><\/h2>\n

Fortunately in Australia we have amongst the longest lifespan of nations around the world, with the average lifespan for females is 86 years of age while males live on average of 82 years but the intergenerational report suggests in 40 years\u2019 time males are likely to live to 90 years of age and females to 92.<\/p>\n

With our rising and ageing population, the government is going to have to spend more on healthcare over the next 40 years.<\/p>\n

Currently, the government spends about 29% of its budget on healthcare and this will rise to 38% over the next 40 years.<\/p>\n

\"Chart05\"<\/a><\/p>\n

It\u2019s not hard to draw the conclusion that as moving forward more Australians will be living longer and requiring either pension or increased health care or both, there won\u2019t be enough people in jobs to support the significant increase in government spending required.<\/p>\n

This just means that we will need to import more skilled, tax-paying workers to help support the system while other Australians are likely to need to work till they\u2019re older and those who are not self-funded retirees are going to be sharing a smaller pool of funds.<\/p>\n

The bottom line<\/span><\/h2>\n

In this age of snap lockdowns, sometimes thinking 40 hours ahead is a challenge.<\/p>\n

Yet the government forecasters are trying to think 40 years ahead and came to the conclusion will be older, smaller, and more in debt than previous Intergenerational Reports suggested.<\/p>\n

However, my mind is still the best country in the world and we are living in the best time in history and I look forward to living another 40 years in Australia which will make me 108 at the time.<\/p>\n

ALSO READ: <\/strong><\/span>House prices grew at third fastest rate in history<\/a><\/p>\n