OPINION: AUSTRALIA is lucky (always has been) in that we have 3.7 billion people living to our north. Australia needs just another eight million taxpayers in order to fund the retirement requirements of the Baby Boomers. That is just 0.2 percent of the population to our north.
Australia decided 17 years ago to grow the population as a means of dealing with the looming growth in retirees.
It is a policy that is ongoing and is forecast to remain in place for the next two decades. Australia’s population growth is the strongest in the world and is the strongest in the history of the country.
So, who gets in to this lucky country? Recent number show 88% of migrants to Australia were aged under 40 years. Around 54% of migrants were aged between 15 and 29 years of age. By far and away the largest intake is skilled workers – replacing the skills lost through retirees; supplementing skills because we cannot train enough people and; doing the jobs we do not want to do anymore.
Our population is expected to increase to around 36 million people. This means Melbourne and Sydney both become the size of London. It means Brisbane becomes the size of Sydney – all this in just 35 years.
We need to house, clothe and feed these newly arrived immigrants. This means we have a housing boom – a housing construction boom, a housing investment boom and a land price boom – not just now, but for decades to come.
Both Melbourne and Sydney need to build another 1.5 million dwellings over the next 35 years. This translates into roughly 500,000 house and land packages, 500,000 townhouses and units and 500,000 apartments. The 500,000 apartments (just to give you an idea) equates to over 14,000 apartments built every year for the next 35 years in each of Melbourne and Sydney.
The impact on commercial property is just as profound. Demand for office space, industrial space and retail floor space continue to grow.
Because Australia is a Federation, the Houses of Parliament (and the Law Courts) play an important locational role. Their presence in the CBDs around the country underwrite demand for office space in the CBDs. Technological advances in the future can be expected to disrupt workplaces and demand for space. Pressure on infrastructure can be expected to be solved in part by moving office jobs to different locations.
OFFICE/RETAIL/INDUSTRIAL: Rising land prices due to increasing demand, intensity of use and scarcity. Industrial pushed to edges of cities, more suburban office around transport hubs with integrated retail amenity.
By Tony Crabb, national director, research, Cushman & Wakefield.*
Property Reviewer on Australian Property Journal