James Carville, allegedly, helped win the Presidency for Bill Clinton in 1992 with a sign in the campaign’s headquarters saying, “The economy, stupid”.
Well maybe there should be a sign saying – “Demographics, stupid” – on our desks as well.
Many in the economic, town planning and property space, including investors, tend to ignore or underplay the influence of demographic factors over the short and medium term.
But demographics matter.
Look at the table below.
|
Australian housing demand |
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|
Lifecycle housing segment |
Annual housing demand |
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|
Description |
Age range |
Past decade |
Next decade |
||
|
Young renters |
15-24 |
11,820 |
8% |
20,410 |
13% |
|
First home buyers |
25-34 |
27,550 |
19% |
13,090 |
9% |
|
First upgrade |
35-44 |
7,800 |
6% |
23,700 |
16% |
|
Second+ upgraders |
45-54 |
7,500 |
5% |
10,360 |
7% |
|
Downsizers |
55-64 |
21,620 |
15% |
8,900 |
6% |
|
Retirees |
65-74 |
39,180 |
28% |
23,830 |
16% |
|
Aged |
75+ |
26,190 |
18% |
52,380 |
34% |
|
Total |
141,660 |
100% |
152,670 |
100% |
|
|
Matusik + ABS 3101.0. and 3222.0. Past decade 2009 to 2019. Next decade 2020 to 2030, medium series. |
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There is a need to build more homes over the next decade than the last ten years.
But not only has the demand lifted, it has shifted too.
We will need more new homes catering for the young and the old, with less for the age groups in between.
That suits those suppling downtown units, infill town homes, smaller suburban apartment complexes and retirement villages.
It also suits the provision of granny flats and backyard home solutions.
Much of this new housing supply will also need to cater for local demand, especially when it comes to older residents.
The irony is that that many ageing residents don’t want to see their suburbs change to cater for their future housing needs. Local councils are often quick to agree.
Of course, stamp duties also halt local housing moves.
In addition, the size of the first home buyer cohort is expected to decline, whilst the need for more homes that cater for families upgrading should rise.
Yet there is a focus on first home buyer benefits. Many local authorities are looking to restrict infill development and implement financially unviable car parking regulations. Whilst stamp duties are too high and property investment incentives too lax.
Our energies seem wrong.
Maybe a “Demographics, stupid” sign isn’t that stupid after all.