What to expect from the Australia of the future

Futurist Bernard Salt shares his views on the demographic trends that are shaping where and how we work, live and play. It’s these shifts that tell us what the client, property market and the Australia of the future is likely to look like in the years to come.  

Australia’s demographics: good news for Australian businesses

The greatest contribution ‘demographics’ can make to Australian business is the interpretation of data and the delivery of insight to answer the question: are we in the right business and the right place at the right time in history?

For such a basic question it sure does pack a punch. In short, business is easier when the ‘demographic wind’ is at your back.

The Australian economy is currently the 14th largest economic force on the planet according to data published by the International Monetary Fund in 2023. Some 30 years earlier, the Australian economy ranked 24th out of 195 countries on the basis of GDP per capita. Today, we rank 9th by this measure. Globalisation has, on average, delivered extraordinary prosperity to the Australian people.

Of the 13 countries with bigger economies than Australia today, only the US has a greater population. This means that the Australians—again, on average—are rich on a per capita basis. It is a fair assessment to conclude that this wealth may not be distributed equally or even fairly across Australia, however this is an assessment that also applies to other nations.

So where do Australians generally spend their wealth and prosperity? I say that Australian wealth and prosperity is evident in every city, suburb and town across the Australian continent. Indeed, Australians spend wealth and prosperity on housing both in purchase and in adornment. We also allocate a portion of our prosperity to superannuation, to lifestyle, to travel and to what is often termed ‘quality of life’.

Going for growth

Over the first 23 years of the 21st century, Australia has added a net extra seven million residents, including four million immigrants. As at the 2021 Census, 28% of the Australian population was born overseas.

This growth, plus some internal reshuffling, has consolidated strong and regular population increases within our largest cities and created emerging lifestyle zones mostly along the coast. A long-term commitment to immigration, as well as a healthy fertility rate (for a developed nation) of 1.6 births per female, drives local demand for housing, consumer goods and infrastructure.

Greater Sydney contains a population estimated at 5.450 million in June 2023, growing at a rate of 1.5 per cent per annum. Melbourne has 5.207 million, growing at 1.9 per cent per annum. For more than a decade it has been evident that Greater Melbourne is set to overtake Greater Sydney as Australia’s largest city at some point in the 2030s. Each city is projected to add a further million, if not more, within a decade. The 100 largest cities and towns in Australia comprise a market of 24 million collectively, growing at 1.6 per cent per year.

In the decade ahead, the Australian population is projected to increase by four million, according to data published by the Australian Bureau of Statistics in November 2023. When this projection is viewed through the lens of net change by single year of age, it is evident that in the coming decade Australian consumer demand will be driven by three markets:

1. A surge in the number of 20-somethings, especially those in their early 20s. This is the great studentification of Australia’s mostly capital cities. International students studying in Australia for 12-months or more are counted in the resident population. It seems that there will be greater demand for student accommodation and supporting cafes and bars and especially in precincts around universities.

2. An even greater surge is expected in the number of 40-somethings, which comprises the millennial (1983-2001) generation who will likely transition from a predominantly single or couple apartment-style living arrangements to a three or four bedroom home, possibly in suburbia, that is better suited to family living. Over the next few years these millennials will also be spilling into their peak earning capacity which, statistically speaking, is the age of 43.

3. A more moderate surge in the 70s and 80s population driven by ageing baby boomers (1946-1964) as well as older generation Xers (1965-1982) in search of downsizing and lifestyle opportunities in the decade ahead. As boomers move into their 80s from 2027 onwards, there will be greater demand for assisted living and in-home care.

The number of Australians aged over 85, which I assume is the prime market for aged and assisted care, has increased with better health care every year since the early 1970s. In 2023, the number of Australians in this cohort increased by 20,000 in net terms, up from barely 2,000 per year in the 1970s. By 2032, Australia’s over-85 cohort will increase by 62,000 per year. As you can imagine, this demographic shift is set to have a substantial impact on demand for aged and in-home care.

Our changing, but relentless, pursuit of lifestyle

The broader ‘wealthification’ of Australians over the last 30 years is evident in a comparison to how Australians lived, in general terms, in the 1960s versus now.

In the 1960s, a typical suburban house comprised a lounge room, three bedrooms, a bathroom and possibly an outside toilet. The family living in this home comprised mum, dad and perhaps four kids, or possibly more. The 1,000-square-metre block would have also supported a veggie patch, an incinerator and most likely a wood stack for heating.

Today, a house typical of middle Australia comprises a bigger dwelling on a smaller block. The house is likely to comprise four bedrooms and two bathrooms and accommodate two income earners and two kids. The modern household probably also has two cars.

Plus, the purpose of the house has changed. Since the pandemic the fourth bedroom, or some other nook, has been given over to a ‘Zoom room’. The back veranda is often known as 'alfresco’ and the lounge room has been abandoned in favour of the combined kitchen and family room.

This is where a large proportion of Australian wealth and prosperity has been channeled over the last three decades. Australians generally and middle Australia specifically have an almost visceral commitment to this kind of housing. Proof of this commitment is evident in the fact that this modern kind of house can be found in more or less every city, suburb and town across the Australian continent.

Overall, although Australians face a range of very real present-day challenges, in relative terms, Australia presents as a good place to live, to work and for many to raise a family. We offer a growing population; we are wealthy on a per-capita basis and we are generally inclined to invest in the homes and the lifestyles that make us happy.

By Bernard Salt AM

Managing Director
The Demographics Group