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Is Australia ready for its population growth over the next decade?

Today we are looking at my favourite chart when analysing the next ten years ahead.

It’s a decidedly simple chart that tells us about the future of Australia. Today we will quickly see what this chart tells us about future housing demand and shifts in consumption patterns.

We are comparing the current Australian population by single year of age, with the projected population ten years from now.

The data comes from the Centre for Population – that’s a bunch of demographers sitting in Canberra who provide Treasury with data to put into the budget papers. It’s rock-solid data that also integrates the latest Australian Bureau of Statistics research.

Forecasting the population ten years into the future is much more precise an exercise than you might think.

We have a very clear idea of the number of babies that will be added to the nation year after year and deaths are also very predictable. Since two thirds of population growth in Australia comes from migration that’s the harder to predict figure.

That said, as a nation we set migration targets and essentially dictate the migration intake. We wouldn’t be off by more than a few hundred thousand people in our migration forecasts.

Since about three quarters of migrants are aged between 18 and 39, we know that the population forecast for the 50 and over cohort will be correct – any variation from the forecast would largely impact people in their 20s and 30s.


Source: The Centre for Population

What the population will look like in aggregate

Let’s see what the future holds. The first observation is that we will see growth, lots of it.

Australia will grow its population by 14%. That’s more than 3.7 million people (or roughly three Adelaides). We must feed, shelter, educate, care for, and entertain 30.9 million souls by 2034.

The growth won’t be evenly distributed across the full age spectrum.

There won't be many more children

We will be adding relatively few children (0-17). The segment grows by less than 6%. That means we must add more childcare facilities, schools, and sporting infrastructure but at a lower rate than total population growth.

As I explained in a previous column, we will still be running out of teachers though.

Young adults (18-25) will grow by 16%. That growth is heavily driven by international students. If we were to close our borders, this segment would be slowed the most. That of course won’t happen.

International students are too important a funding source for our universities. With fewer international students, fees for local enrolments would need to go up or we would need to collect more tax dollars.

Neither option is remotely feasible. Expect massive growth in international student accommodation. Most members of this age group live in the inner suburbs as renters and will drive demand for apartments. Our inner suburbs will densify even more.

Early career professionals will be slow growers

Early career professionals (25-34) are only growing by 11%. In the past decade, the massive Millennial generation occupied the 25-34 segment.

Therefore, despite many migrants adding to this cohort growth will stay below the national average.

This cohort will still overwhelmingly be renting and will not have had kids yet. About half of them will work in knowledge jobs located in the CBDs of our big cities.

They will want to live centrally to frequent hospitality venues, visit events, and minimise commuting time. As they start coupling up, they will operate as dual income households without children and have cash to spare. A great cohort to be selling too.

Millennials will see a healthy rise

Millennials will be occupying the 34-51 segment. All kids in childcare and primary school will have Millennial parents. This cohort sees growth of 16%, which is slightly above the national average.

Considering the extremely high female workforce participation rate of Millennial women, the demand for childcare will be higher than ever. The current system couldn’t cope with such increases.

Millennial families will have moved to the urban fringe since this is where the lion share of family-sized houses were for sale. Councils on the urban fringe must prepare now for the very predictable increase in demand for such services.

Gen X'ers will be outnumbered

The 52-64 segment sees humble growth of 6%. Almost all people in this age segment are already in Australia. Migration isn’t topping up the population over 50 years of age.

Baby Boomers occupied this segment in the recent past and now hand over the impactful 50s to the poor forgotten Gen Xers. These are the upgraders, the parents of teenagers that want a larger home. It remains to be seen how many large enough homes at the right price point will enter the market.

If current market conditions remain, this cohort will stay largely put.

A larger army of grey nomads

The 65 and over cohort grows by 29% – that’s two times the rate of the national average rate. Caravan parks will be booming as the army of grey nomads swells to record size.

In many respects the 65-74 segment is the best consumer cohort. They have time, money, and energy. All other cohorts tend to miss at least one of the three.

Downsizing will start becoming a mass-phenomenon by the 2030s as older Baby Boomers see their health decline and the family home becomes a nuisance to manage (or even a physical hazard). Baby Boomer homes are located in the middle suburbs of Australia.

Throughout the 2030s, these homes will enter the market and many of them will be bulldozed to make room for three townhouses – densification of the middle suburbs is all but guaranteed.

Over 85s will boom

The most dramatic growth occurs in the 85+ segment which will increase by a massive 68% to 974,000 (up from 580,000). Half of the 85 and over segment needs care.

If you’ve been to an aged care home recently, you will know that we import care workers from overseas. The 85+ cohort alone guarantees a continuation of our high migration approach. Also, anyone operating a business in aged care, healthcare, or funeral homes will have a lucrative decade ahead.

This is just the top-level overview of what type of forecasting can be done with this simplest of charts.

 

Demographer Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His latest book aims to awaken the love of maps and data in young readers.

This article was originally published by The New Daily and is reproduced with permission.

 

19 Comments
Keybaord warrior
May 04, 2024

this is interesting

Bob Jarvie
April 16, 2024


Population growth is purely determined by Government policy since our natural birthrate is below replacement level. High immigration helps to age the population as the under 20 component is very low.

Kenneth Beer
April 16, 2024

Why no mention of the 75-84 segment?

Marc wigan (82)
April 15, 2024

Much of the missing productivity can come from over 65s… but ageism stops this cold-yet with the steady increase in retirement age more and more working people are blocked from NDIS however severe this disability while watching those who got it just before 64 revelling in the massive increase in support that continues fir the rest of their life these anomalies are growing fast and reducing productivity equally rapidly. One might also hazard a “guess” that this has a large component of ageism and fear of the rapidly rising percentage of healthier over 65s and their very substantial skill and experience base. It’s really time to fix these growing anomalies in the interest of the whole community but the chances of anything like this occurring are vanishingly small

peter care
April 15, 2024

There is a major flaw with our constitution that must be fixed. All the benefits of immigration (ie extra income tax) goes to the federal government and all the costs (ie infrastructure and health spending) is incurred by the states. Therefore the federal government wants higher immigration because they don’t pay the costs.

The solution is to force the federal government to pay for the additional costs of each each extra immigrant to the state or territory where they reside for tge first 5 years.

This will help restrict immigration to the number of people we actually need. Hopefullu this will mean more health care, aged care and construction staff and fewer hospitality and professional services staff.

Dudley
April 15, 2024

"federal government wants higher immigration because they don’t pay the costs":

Table 3: Net Overseas Migration (NOM) since 1901
https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1617/Quick_Guides/MigrationStatistics#_Table_3:_Net

Stable Genius
April 12, 2024

Albanese is adding One Million net migration in two years, fully 70-75% higher than Rudd ever dared. Killing ordinary Australians.

papaschmidt
April 13, 2024

You obviously did not read the article.
We need the immigrants to do the work.

James
April 14, 2024

Temporary fix. Immigrants get old too! Ever expanding population then, beyond the capability of our resources? More of everything including carbon emissions (if you drink from that fountain). More power required, more water, food.....where does it end? What is the right population size for our country? Pity politicians and bureaucrats don't reverse engineer it rather than just pop up GDP and employ short term electoral cycle thinking!

Disgruntled
April 21, 2024

Yes, we need immigration. We also need to look at realistic rates of immigration.

Leon Seymore
April 12, 2024

The predictions are not going to take into account the coming of robotics and artificial intelligence. Robotics is going to take over human labour, and AI is going to take over administration and intellectual labour. These new "labourers" are not going to pay any tax, although they are going to take everyone's jobs. 

Ian L
April 13, 2024

The 'new labourers' will not pay tax, as they won't have any income. In other words, they will work for free, increasing productivity and living standards for the rest of us, who can relax by the pool counting our retirement money.

Graham W
April 13, 2024

I Agree as migrants are more likely to vote for the government that allowed them in. Another pox on self serving politicians.

Kevin
April 14, 2024

What an astonishing skill set you have there Graham.The often quoted 51% of the population are from o/seas or have a parent born o/seas .

You know when most of them got here,who was in power at the time,and who they are likely to vote for. Astonishing!

Peter B
April 12, 2024

I remember studying the baby boom when I was in school in the 1960s and its implications - mainly that we would have a lot of retirees supported by fewer people working and paying taxes. We knew about it then and have done very little since.
High migration looks wonderful for the Federal Government as it props up growth and it would probably be even higher if visa processing times were not so abysmal. The states suddenly find that they have a lot more services to deliver in unexpected places with no additional funding - and local government wonders who all these new people are and where they are coming from. Current residents may resent their area becoming a migration destination formed of insular communities of migrants. For the current rate of migration, we need to build a city the size of Adelaide every 2.5 years - and I do not see that happening despite all the political hot air. Then of course there are issues relating to the big cities of Sydney, Melbourne and Brisbane getting clogged up with more and more people on the driest inhabited continent with enough current environmental issues related to sustainability and the reversal of our current impact. A sorry state of affairs.

Andrew Smith
April 12, 2024

Good clear analysis, for a change, a balanced overview compared to many faux experts in RW MSM, and it's not just about numbers, but the population pyramid, spread, management of people and budgets (esp more oldies i.e. dependents).

'Headline' noise in media where focus is solely on short term NOM net OS migration, more accurately border movements of students' churn, egregiously mislabelled as immigration (vs. actual modest permanent migration cap), expanded to 12/16+ months 2006 vs 12/12 months) and tends to spike in short term creating 'data noise', then headlines follow without any clear correlation of e.g. housing crisis due to 'immigration'*.

However, the issue is Australians and PRs in the ageing permanent cohort of silent and now boomer gens; 5 million+ people transitioning to and through retirement versus working age decline in the permanent cohort.

The NOM churn on top plugs a few gaps in hospitality and pt/casual work, but more importantly the NOM churn is free money from 'net financial contributors' on GST receipts, plus visitors spending to support budgets, both increase aggregate demand, without increasing taxes and/or reduction in services and delivery.

*One is appalled at the egregious non analysis and misrepresentation of data, principles of Statistics 101 and process applied to all things immigration and/or population growth. This includes those well educated finance types with MSM access data literate who produce broad and deep finance analysis or advice, but demographics is just talking points and glib one liners.....

Don
April 12, 2024

Demographic experts have a track record of under estimating population growth.

Bruce
April 12, 2024

Given that Universities are exempt from GST and pay little tax, maybe the Government should link enrolments to the quantity of student accommodation they can supply.

Bryan
April 11, 2024

A logical and compelling theme (stock) picking article!

 

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