The silver tsunami: How our aging population is shaping our economy and property markets

This change is set to profoundly impact everything from housing demand to the workforce, and especially the aged care sector.

In this episode of the Demographics Decoded Podcast, we explore how this "Silver Tsunami" is poised to reshape our economy and property markets.

For weekly insights and strategic advice, subscribe to the Demographics Decoded podcast, where we will continue to explore these trends and their implications in greater detail.

The aging trend and its implications

As a nation, Australia is getting older.

The 85-plus age group, a critical demographic, is expected to double within the next 14 years.

This means that by 2034, the number of Australians aged 85 and over will rise from just under 600,000 to 1.2 million.

This shift is inevitable and will have far-reaching implications.

One of the most immediate impacts will be on our aged care system.

The current system is already strained, and with the doubling of the elderly population, we will face significant challenges in providing adequate care.

The aged care workforce will need to expand substantially, but attracting and retaining workers in this sector is already difficult due to poor retention rates and relatively low wages compared to other industries.

Housing market transformations

The aging population will also drive changes in housing demand.

While downsizing is a common trend among retirees, it does not occur at the scale many might expect.

Most Australians prefer to stay in their family homes for as long as possible.

This preference will keep the demand for traditional housing stable, but the market for retirement living and aged care facilities is set to boom.

Retirement villages and aged care homes are becoming increasingly popular as more people reach an age where they require some level of assistance.

The demand for these types of housing will continue to grow, presenting significant opportunities for developers and investors.

Interestingly, one of the best things retirees can do for their mental health is to downsize to a more walkable neighbourhood.

Proximity to medical facilities, friends, and family can make a significant difference in their quality of life.

This trend could influence urban planning and the development of new housing projects aimed at older Australians.

Economic impact and workforce challenges

The economic implications of an aging population are vast.

As more people retire, the workforce shrinks, leading to potential skill shortages. This is compounded by the fact that younger generations are not entering the workforce at a rate sufficient to replace retirees.

The dependency ratio, which measures the proportion of non-working individuals (both young and old) to the working-age population, will increase, putting additional strain on those still in the workforce.

To mitigate these effects, Australia will need to continue its strong migration policy.

Migrants, particularly younger ones, can help fill the gaps in the labour market and support economic growth.

However, this approach is not without its political challenges, as debates around migration levels and their impact on housing affordability continue.

Innovations in aged care

Technology and innovation will play crucial roles in addressing the challenges of aged care.

While artificial intelligence and robotics cannot replace the human touch needed in care, they can enhance efficiency.

For example, apps that translate spoken language into English for non-native-speaking care workers can reduce the time spent on paperwork, allowing more time for actual care work.

Similarly, robotics can assist in non-care tasks, such as delivering medicines in hospitals, freeing up skilled nurses to focus on patient care.

Home modifications and wearable technology will also help the elderly live independently for longer.

Simple changes, like installing lifts in homes or using devices to monitor vital signs, can prevent accidents and reduce the need for more intensive care.

Preparing for the future

As we look ahead, it's clear that we need to adopt a long-term perspective.

Policies encouraging right-sizing, where retirees move to more suitable housing before it becomes a necessity, can improve mental health and overall well-being.

Additionally, the superannuation system will play a vital role in ensuring that Australians can fund their own retirements, reducing reliance on the pension system.

For younger generations, the advice is clear: plan for retirement early.

Owning a home outright by retirement age can significantly reduce living costs and provide financial security.

The concept of delayed gratification-making sacrifices now for a more comfortable future-remains as relevant as ever.

Conclusion

Australia's aging population presents both challenges and opportunities.

While there are significant hurdles to overcome, particularly in the aged care sector and workforce management, there are also substantial opportunities for growth and innovation in the housing market and beyond.

By adopting forward-thinking policies and leveraging technology, we can ensure a prosperous future for all Australians, regardless of age.