What’s ahead for Australia for the balance of this decade?
That’s what I discuss today with leading demographer Simon Kuestenmacher.
Forecasting is important because it can help us to make better investment and financial decisions.
If we have a sense of where the world and our economy are going, we can prepare better.
In theory, that’s what forecasting should do.
In practice, it’s much harder as the world keeps throwing surprises at us.
But if you’ve heard my chats with Simon before, you’ll know how he shares great insights, so if you are interested in property investment, or just the future of our country and how it will relate to you, your job, and your prosperity I'm sure you'll get benefit from my chat so welcome to this week’s show.
I remember the beginning of this decade well – it really wasn’t that long ago that we introduced the 2020s, and we were hoping it would be roaring 20s.
But look what’s happened since.
If anybody would have told you two years ago that Australia would be ravaged by bushfires, multiple floods, prolong periods of lockdowns, and a pandemic that killed thousands of people and made us isolate and wear masks, would you have believed them?
And just as we thought we were moving out of our Covid cocoons, we were hit with high inflation, rising interest rates, and economic concerns, so it’s likely what we are about to face will be quite different from what we were hoping for only a couple of years ago.
So, what's ahead for the balance of this decade?
And what will this mean for you and me as property owners, property investors, and businesspeople?
That's what I want to ask leaving tomorrow for Simon Kuestenmacher, Co-Founder of The Demographics Group and a columnist with The Australian and The New Daily newspapers.
Some of what’s ahead for the rest of the decade:
- The 2020s will be the last decade, with Boomers making up a significant percentage of the workforce.
- It will be increasingly hard to find migrants and skilled workers for professions.
- We’ll continue to be a migrant nation and even become more multicultural.
- There will be a transfer of wealth, including residential real estate, from boomers and builders to the next generations.
- There’s always going to be a hole in the generational pyramid, but the country will still grow.
- Recent census:
- An increase in people identifying as indigenous.
- The country has become less religious.
- The structural demographics of Australia are still favourable.
- We continue to attract migrants.
- Commodities we sell will go up in price, so we’ll continue to make money.
It’s not so much that Baby Boomers (born 1946-1964) are expected to die in droves in the coming decade; it’s more that they’re right now exiting the workforce at a faster rate than Millennials (born 1982-2000), and their successors, are entering the workforce.
The net effect of different-sized cohorts entering and exiting the workforce is a shallower pool of available labour leading to a skills drought.
The workforce management industry’s embrace and integration of the “Gig Economy” and other tech-driven, non-traditional labour channels provides mutual benefit for hiring organizations and Boomer workers alike.
- There will be more of us.
- The population will be older.
- More migrants, multicultural.
Against the backdrop of population aging (i.e., lower fertility and higher life expectancy), the global working-age population is anticipated to grow at a much slower pace over the next decade and a half as fast as 2030 in comparison to the past 15 years.
A structural change will be when boomers and builders a generation die off and transfer $6.2 trillion worth of wealth in their residential Real Estate to their families.
Currently, Australia's residential property market is worth around $10 trillion, and it is suggested that around 60% of this is held by the older generations - the baby boomers and their parents, the builders.
This makes sense as they've been around long enough to own properties outright with no mortgage and only more affluent homes.
There have been various studies trying to estimate how big this wealth transfer will be, but last year Australia’s productivity Commission projected there will be a four-fold increase in the value of inheritances over the next 30 years.
Baby Boomers will pass on an estimated $224 billion each year in inheritances by 2050 as record housing, super wealth, and fewer heirs create a $3.5 trillion bonanza for younger generations, including the poorest Australians.
There are closed borders, less immigration, and can’t rely on the free flow of goods and services – these are all reasons why we need to become more self-sufficient.
Links and Resources:
If you’re keen to buy your next home or investment property, why not get the team at Metropole to build you a personalised Strategic Property Plan – this will help both beginning and experienced investors.
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Some of our favourite quotes from the show:
“I think multi-generational workforces have got a lot to be said for, because there is still a lot of information, a lot of experience, in the heads of those older people.” – Michael Yardney
“But there’s going to be a significant structural change when the boomers, and the generation before them, the builders, die off because it’s been suggested there could be a transfer of even up to $6.2 trillion dollars’ worth of wealth in their residential real estates to their family.” – Michael Yardney
“As the years passed by, I began to understand it’s often better to lose a few battles in order to win the war.” – Michael Yardney
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