By Michael Yardney September 13, 2024

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The Silver Tsunami: How Our Aging Population is Shaping Our Economy and Property Markets

Property Investment
The Silver Tsunami: How Our Aging Population is Shaping Our Economy and Property Markets

Key takeaways

Australia's demographic landscape is shifting dramatically, with the elderly population set to profoundly impact housing demand, the workforce and the aged care sector.

The aging population will drive changes in housing demand, with a preference for staying in family homes for as long as possible. The demand for retirement living and aged care facilities is set to boom, presenting significant opportunities for developers and investors.

Australia's aging population presents challenges and opportunities, particularly in the aged care sector and workforce management, but also in the housing market.

Australia's demographic landscape is shifting dramatically, with one of the most significant trends being the rapid increase in our elderly population.

This change is set to profoundly impact everything from housing demand to the workforce, and especially the aged care sector.

In this episode of the Demographics Decoded Podcast, we explore how this "Silver Tsunami" is poised to reshape our economy and property markets.

The Silver Tsunami: How Our Aging Population is Shaping Our Economy and the Property Markets

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The aging trend and its implications

As a nation, Australia is getting older.

The 85-plus age group, a critical demographic, is expected to double within the next 14 years.

This means that by 2034, the number of Australians aged 85 and over will rise from just under 600,000 to 1.2 million.

This shift is inevitable and will have far-reaching implications.

One of the most immediate impacts will be on our aged care system.

The current system is already strained, and with the doubling of the elderly population, we will face significant challenges in providing adequate care.

The aged care workforce will need to expand substantially, but attracting and retaining workers in this sector is already difficult due to poor retention rates and relatively low wages compared to other industries.

Housing market transformations

The aging population will also drive changes in housing demand.

While downsizing is a common trend among retirees, it does not occur at the scale many might expect.

Most Australians prefer to stay in their family homes for as long as possible.

This preference will keep the demand for traditional housing stable, but the market for retirement living and aged care facilities is set to boom.

Retirement villages and aged care homes are becoming increasingly popular as more people reach an age where they require some level of assistance.

The demand for these types of housing will continue to grow, presenting significant opportunities for developers and investors.

Interestingly, one of the best things retirees can do for their mental health is to downsize to a more walkable neighbourhood.

Proximity to medical facilities, friends, and family can make a significant difference in their quality of life.

This trend could influence urban planning and the development of new housing projects aimed at older Australians.

Economic impact and workforce challenges

The economic implications of an aging population are vast.

As more people retire, the workforce shrinks, leading to potential skill shortages. This is compounded by the fact that younger generations are not entering the workforce at a rate sufficient to replace retirees.

The dependency ratio, which measures the proportion of non-working individuals (both young and old) to the working-age population, will increase, putting additional strain on those still in the workforce.

To mitigate these effects, Australia will need to continue its strong migration policy.

Migrants, particularly younger ones, can help fill the gaps in the labour market and support economic growth.

However, this approach is not without its political challenges, as debates around migration levels and their impact on housing affordability continue.

Innovations in aged care

Technology and innovation will play crucial roles in addressing the challenges of aged care.

While artificial intelligence and robotics cannot replace the human touch needed in care, they can enhance efficiency.

For example, apps that translate spoken language into English for non-native-speaking care workers can reduce the time spent on paperwork, allowing more time for actual care work.

Similarly, robotics can assist in non-care tasks, such as delivering medicines in hospitals, freeing up skilled nurses to focus on patient care.

Home modifications and wearable technology will also help the elderly live independently for longer.

Simple changes, like installing lifts in homes or using devices to monitor vital signs, can prevent accidents and reduce the need for more intensive care.

Preparing for the future

As we look ahead, it's clear that we need to adopt a long-term perspective.

Policies encouraging right-sizing, where retirees move to more suitable housing before it becomes a necessity, can improve mental health and overall well-being.

Additionally, the superannuation system will play a vital role in ensuring that Australians can fund their own retirements, reducing reliance on the pension system.

For younger generations, the advice is clear: plan for retirement early.

Owning a home outright by retirement age can significantly reduce living costs and provide financial security.

The concept of delayed gratification—making sacrifices now for a more comfortable future—remains as relevant as ever.

Conclusion

Australia's aging population presents both challenges and opportunities.

While there are significant hurdles to overcome, particularly in the aged care sector and workforce management, there are also substantial opportunities for growth and innovation in the housing market and beyond.

By adopting forward-thinking policies and leveraging technology, we can ensure a prosperous future for all Australians, regardless of age.

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Stay tuned for more insights that will help you navigate these significant demographic shifts.

About Michael Yardney Michael is the founder of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.

4 comments

Andrew Smith 2024-09-14 19:11:08

Good again, and begs highlighting statements made by former Bush and Clinton administrations, Robert Reich stating over a decade ago 'why is the Angloworld so paranoid about immigrants when we are the best in the world at immigration?' While our m ...Read full version

1 reply

Marcus wigan 2024-09-05 06:00:15

1 reply

Would you like to share your thoughts?

Andrew Smith September 14, 2024

Good again, and begs highlighting statements made by former Bush and Clinton administrations, Robert Reich stating over a decade ago ‘why is the Angloworld so paranoid about immigrants when we are the best in the world at immigration?’

While our media and politicians are compelled to focus on all things negative about ‘immigrants’, our ageing population dominated by 7+ million boomers and oldies (youngest 59 years old & the over 75 year olds are the fastest in Oz) in the permanent cohort, are ignored or bypassed to complain about ‘immigrants’, yet Australia has to deal with ageing demographics like any other nation (most others lacked immigration in past are being hit hardest)?

Not helped by media, politicians and influencers describing anyone counted into the NOM, including high student numbers or temporary churn over, as ‘immigrants’ suggesting permanence, but then avoid focus on modest permanent intake of about 190K p.a.?

Japan is behind the curve and many influencers used to claim that an ageing nation does not need ‘immigration’, but in fact Japan does, and its increasing, why?

It’s not just about employment or skills gaps, but having working age tax payers vs. increasing numbers of retirees, not paying taxes, living longer and tugging on budgets -> increasing old age dependency ratios (can crash budgets); temporary churn over are ‘net financial contributors’ paying some PAYE, but $billions in GST (with friends & family visiting) or free money.

On housing, faux outrage over a spike in student numbers mislabelled as ‘immigrants’, but little if any real impact on or linkage to the ‘market’ when many do homestays (locals rent out spare rooms), relatives/friends, hostels, on/off campus student accommodation, house and apartment shares (most is not publicly listed hence, precludes supply analysis in media?).

However, many Australians could be and should be looking at similar types of accommodation and housing e.g. apartments, units in CBD close to amenities (even ‘in house’) and even shared houses in suburbs vs. living alone, socially detached and dealing with related issues including transport, maintenance etc., for many years to come….

Happening already, stayed in an apartment development in Williamstown/Melb. pre Covid, mostly people from the western suburbs and some interstate or OS, many singles then retirees who had downsized and saw the advantages of secure and convenient apartment living.

Good news for younger Australians and advice peers offer, like generations ago, is rent an apartment preferably with a life partner, save and save (but take a trip), then move into the ‘house’ market with hefty depoist & complete research versus too many making the jump too soon due media & peer pressure, too young and too uninformed…. willing on a loss in value as soon as they buy when prices are stagnant…….

1 reply Reply

Michael Yardney September 14, 2024

Thanks for your detailed comment

0 replies Reply

Marcus wigan September 5, 2024

I suggest that it is well past time to add some basic data frameworks to this heavily sterotyped view. The 65-75 group is increasingly healthy and a rising fraction are still in the workforce (or would be if their competence and productivity was actually considered at all). The 75-85 group are barely considered at all in data collection and the high and rising voluntary work-not just in low key areas is a very substantial disregarded economic contribution carefully ignored so that ageism can be supported. The fraction of each of the three groups 65-85,75-85, 85+ need to included in all age structured surveys as routine. Then perhaps we in our 80s(I’m 83) will also be considered for our contributions as well as our costs (most of which we still carry, and if the scuttlebutt about the new aged is correct this will rise still faster with the careful apartheid of the 400% greater contributions TO those who get identical disabilities at 65+2 second as those who get is at 75-1 second part of the strategy. Of course we will stay in our homes as long as possible. I have 1gb internet and high quality networking across the planet, an excellent library of all kinds what passes by the Telstra Optus near duopoly as good communications, careful investment in insulation, PV etc to drive down energy costs and maintain excellent heating and cooling comfort by 40 years of small strategic increments(yes our 1928 house now rates 9.3) and can live learn and add (unpaid and unvalued) high level contributions to people and society-yet we still would have zero autonomy if forced into any of the aged are homes we have inspected until the new act comes through. So please explain why
1. You are not including the very substantial and rising unpaid and unvalued cobtrivutions(albeit by declining fractions the age groups rise)
2. The reasons we resist being warehoused in what the RC showed(what I had already found for myself years ago)such a precipitous fall in almost all respects?
3. The careful inaccessibility of the level 3,4 home care packages?

I do not contend that I am typical, simply that there are rising numbers of us and growing as the aged tsunami grows. Yet the ageist attitudes I encounter are quite stunning.

ALL the continuing requests for intellectual contributions in my 70s and 80s from PHd supervisions (Finland) to colloquia (Arizona)and fast response needed conference and workshop contributions (Hong Kong) come from outside Australia

It’s way past time that surveys, thinking, inclusion, and autonomy started to include us a great deal more-let alone in our own “representation” which is just as exclusionary and ageist.

In housing the near total neglect of the reasons for sticking to our homes (if of course we are fortunate to have them-we were selling furniture to survive in the late 1990s in our late 50s). I have listed a few. And having done all the research and sums on downsizing we found that apartments made little economic sense, and agedcare as we and the RC found was a financial black hole of zero autonomy

So a little more structured realism in the underpinning and interpreting of the changing structure of the different segments inside the perfectly reasonably reported demographic trends is needed