As a property investor, businessperson or entrepreneur you need to understand more than your craft. But you also need to keep an eye on Australia’s economy and while the variables influencing our economic growth are numerous and complex there is one particular driver whose overwhelming influence has the final say – and that’s demographics. Yet I’ve found the significance of demographics is perhaps underappreciated by most investors, which is unfortunate given its impact can be found in almost all aspects of our economy and propert...
As a property investor, businessperson or entrepreneur you need to understand more than your craft.
But you also need to keep an eye on Australia’s economy and while the variables influencing our economic growth are numerous and complex there is one particular driver whose overwhelming influence has the final say – and that’s demographics.
Yet I’ve found the significance of demographics is perhaps underappreciated by most investors, which is unfortunate given its impact can be found in almost all aspects of our economy and property markets, from economic growth and consumption to interest rates and valuations, and even to the velocity of money and the balance sheets of the world's central banks.
Demographics is what ties it all together.
I guess because these trends are slow moving and long-term and not easily visible, they tend to be ignored by many, but they shouldn’t be and that’s why I have my regular chats with leading demographer Simon Kuestenmacher.
Today we’re going to talk about some recent forecasts that will have a significant impact on our economy, employment, and our property markets. Then I’ll share today’s mindset message with you.
These projections reveal Australia’s economic future
As a property investor I’ve been a lifelong student of demographics because demographic changes influence the underlying growth rate of the economy, our unemployment rate, they directly influence housing market trends, living standards, our savings rates, consumption and the demand for financial assets
As you can see, demographic creates our destiny so if you want to become a successful investor you must understand what demographic changes are ahead, and that’s why I enjoy my regular chats with Simon Kuesetenmacher the co-founder of The Demographics Group, who’s columns and media commentary focus on current socio-demographic trends and how these will impact Australia.
Today’s chat is about the latest five-year employment projections from the National Skills Commission.
- Our workforce is projected to grow by almost a million people over the five years from November 2020 to November 2025.
- That figure is a bit weaker than the growth leading up to the pandemic (1,154,000) but it suggests that we should be cautiously optimistic about our economy.
- More than half (53 percent) of the new jobs require a university-level education.
- These jobs can only get filled help via migration.
- Currently, 15 percent of all jobs are part of the middle class
- The projected growth falls way short of expectations, as only 7 percent of new jobs will be middle class.
- A favourable working age population will boost economic growth and provide inflationary pressures
- An unfavourable demographic makeup will impose deflationary pressures on an economy and provide a headwind to economic growth.
- A quarter of all new jobs fall into the healthcare sector.
- The hospitality sector is projected to have fully recovered by 2025 and even slightly improve on pre-pandemic levels.
- Professional services are adding plenty of jobs for highly trained workers.
- The two biggest growth occupations are aged and disabled carers and registered nurses, which together will grow by over 100,000 jobs.
- We are adding about 1000 new carer jobs every single month.
- Considering more elderly retirees will be keen to continue living in their own homes, the opportunities for innovative in-home care services are endless.
- Nurses will continue to be in high demand
- More than half of the new jobs we’re creating fall into skill level one.
- We’re also creating a lot of skill level four jobs – a quarter of all jobs will be in skill level four.
- We’re creating some jobs, not too many, in skill level five jobs – very low-level jobs.
Optimistic drivers of our economic future:
- Demographic profile
We have this big millennial cohort that saves us from the immediate impacts of the pandemic simply because the millennial cohort, the largest cohort happens to be on this stage of a life cycle where they purchase housing.
- Students will return, and international talent will come back
The international market completely evaporated due to the pandemic. The good news is, as soon as borders open up, the students will be back at pretty much pre-pandemic levels, which will bring life back into the inner cities
Resources:
Michael Yardney
Simon Kuestenmacher - Director of Research at The Demographics Group
As our markets move forward why not get the team at Metropole to build you a personalised Strategic Property Plan – this will help both beginning and experienced investors.
Get a bundle of eBooks and reports www.PodcastBonus.com.au
Shownotes plus more here: This new research makes Australia’s economic future clear, with Simon Kuestenmacher
Some of our favourite quotes from the show:
“I think a favourable working-age population is going to be really important for us too.” – Michael Yardney
“We’re going to be seen as a safe country to live in, an economy that’s going to boom, and we’ll be attracting the sort of people who probably in the past would have gone overseas to have their high-paying jobs.” – Michael Yardney
“Those that battle through the challenges get to reap the rewards.” – Michael Yardney
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