What’s ahead for our property markets, not just now but in the medium and long-term future?
Wouldn’t you like to know?
Because if you did, that would make you a more successful investor, wouldn’t it?
We understand that forecasting just seems to be getting harder and harder.
There are so many conflicting factors out there.
But in today’s show, I discuss three megatrends that are going to signal Australia’s future with leading demographer Simon Kustenmacher to give you more clarity about what’s ahead, and that will help you make better investment and business decisions.
Let’s look at three demographic megatrends that might help us in our forecasting efforts.
Read on at your own risk – these trends are all controversial to a degree.
- Population growth
Firstly, we can expect a quick return to pre-COVID population growth (maybe even beyond) driven by migration, of which more than 80 per cent is represented by international students and skilled workers.
It remains to be seen if our universities were smart enough to better align their offerings with the needs of the Australian labour force.
The return of international students will help to energize the inner cities again and relieve the skills shortage in hospitality.
Historically, about one in six international students became permanent residents.
In light of the national skills shortage, we should ease the path to citizenship for international students.
Skilled migrants are desperately needed in Australia.
Businesses across the country, spanning all industries, are complaining about the lack of skilled workers.
If we fail to attract skilled workers, we can’t possibly build all the infrastructure projects state and federal budgets generously proposed, and our businesses can’t expand operations.
Will migrants still want to come to Australia though?
We are still one of the richest nations on the planet, offering safe cities, plenty of high-income jobs, education, and a democratic government.
On top of this, a rising number of migrants will see moving to Australia as a nice hedge against a potential major war in Europe.
- Short-term GDP growth
Secondly, Australia will see GDP growth – at least in the short term.
Australia’s 10 largest exports are all stuff that we dig out of the ground (iron ore, coal, oil, gold, copper) or food (wheat, meat).
The war in Ukraine further drives up prices for such goods, since global supply shrinks while demand remains stable.
As tourism and international education inch their way back to pre-COVID levels, foreign money flows into Australia and drives up GDP.
Australians are unlikely to feel much richer though.
Without open borders and free trade, lots of things will get more expensive.
We consume lots of stuff from overseas.
Our largest imports are motor vehicles, fuels, pharmaceuticals, communication equipment, computers, and all sorts of machinery and equipment.
We must reposition our economy on clearly future-focused industries since the price hikes in foodstuffs and commodities won’t last forever.
- Polarized labour force
Thirdly, our workforce is hollowing out.
We create plenty of high-paying knowledge jobs.
These highly educated workers are paid well.
We also create lots of poorly paid low-skilled and unskilled jobs.
These jobs don’t tend to have a career pathway.
Job security is also terrible.
It was low-skilled workers who lost their jobs during the pandemic.
Workers in these skill level 4 and 5 jobs don’t earn enough to afford a family home in a capital city.
Although we are adding highly and poorly paid jobs, we are taking away middle-income jobs.
How can we maintain social cohesion in a country that is continuing to drift into two clearly separated highly paid and poorly paid camps?
From a business perspective, that means blindly targeting the centre of the market is increasingly a losing bet.
One size doesn’t fit all.
The centre is melting away while the edges grow.
Adjust your business practices to capture the growing fringes.
Population growth can be assumed.
More people, more GDP.
The workforce shifts towards more highly skilled jobs – and this, too, will drive up GDP as knowledge workers contribute more dollars to GDP.
Global prices for resources and commodities will go up, also driving GDP.
Australia stands a fair chance to climb up the rankings to nominally become the 12th or 11th largest economy.
Russian GDP will plummet, and we might soon catch up with Brazil.
Take into account these three megatrends when forecasting the future and you stand a better chance of getting it right.
Links and Resources:
As our markets move forward why not get the team at Metropole to build you a personalized Strategic Property Plan – this will help both beginning and experienced investors.
Get a bundle of eBooks and reports here:- www.PodcastBonus.com.au
Some of our favourite quotes from the show:
“So hopefully, this increasing improvement in our general economy will trickle down to the average Australian feeling more comfortable and wealthy as well.” – Michael Yardney
“Property values have gone up 20, 30%, Simon, but the wages have hardly gone up at all.” – Michael Yardney
“So, the first major lesson in life is to learn how to handle the winters.” – Michael Yardney
PLEASE LEAVE US A REVIEW
Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how
Subscribe & don’t miss a single episode of Michael Yardney’s podcast
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
Need help listening to Michael Yardney’s podcast from your phone or tablet?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
Prefer to subscribe via email?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.