Australia’s stronger immigration – what it means for property investors

Economics commentator Michael Pascoe recently wrote an insightful article on Yahoo about Australia’s population growth.

He explained how both sides of politics as well as the Reserve Bank all recognize that our population is going to have to increase significantly, yet no one really wants to talk about it.

Pascoe wrote:

Tucked away in Friday’s Reserve Bank statement on monetary policy is the assumption that Canberra is too afraid to make: Australia’s working age population will grow by 1.7 per cent over the next 2 years “in line with the recent pick-up in the rate of immigration”.

Ever since Kevin Rudd made the mistake of calling a population of 40-odd million “Big Australia”, politicians on both sides have run a mile from population growth figures. Government and opposition alike prefer to ignore population questions and, when cornered, tend to resort to various weasel words to give the impression that nothing much is happening and we should all just move along.

It’s even Liberal Party policy to out-source migration levels to the Productivity Commission so that politicians won’t be held responsible.

But what both sides of politics know and quietly go along with is that 40 million is not actually a “Big Australia” – it’s simply what we have to have to handle the strain of Baby Boomers retiring from the workforce and becoming very expensive to keep in their old age. Without an on-going strong skilled migration program, Gen X and Y would have to pay vastly more tax to support Boomers for whom compulsory super came along too late. And even with migration growth, our demographics say the total tax take will still have to rise.

My thoughts:

If you’ve been following my blogs you’ll know that I see Australia’s strong future population growth as one of the major elements underpinning the long term success of our property markets. The other is the increasing wealth of our nation.

As I see it there’s no choice –  our population is going to have to grow substantially. And deep down both sides of politics agree.

Of course his could (OK it will) lead to social and infrastructure problems, but it will also underpin our property markets well into the future.

Especially when you realise that most of these new migrants will want to live in one of our four major capital cities and many will want to live in the same suburbs – those where the action is. Yes the old supply and demand ratio will play it’s part pushing up the value of well located properties.



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About

Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been once agin been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'Australia’s stronger immigration – what it means for property investors' have 1 comment

  1. December 26, 2012 @ 10:28 am Mark Whorton

    Just wanted to say thanks for your daily blogs. I look forward to them Michael
    Have a great Xmas break and keep up the good work

    Reply


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