Ageing and asset prices

Following on from my previous article, which discussed the adverse impact of Australia’s ageing population on consumption expenditure, I now want to turn to the likely impact of population ageing on asset prices.

Much of this analysis will again draw upon the Australian Bureau of Statistics (ABS) long-term population projections, which provides detailed estimates of Australia’s population under three scenarios:

  1. High growth scenario (Series A), which assumes an increase in the fertility rate, higher net overseas migration than existed in 2008, and an increase in life expectancy;
  2. Medium growth scenario (Series B), which largely reflected the trends in fertility, life expectancy at birth, and net overseas migration that existed in 2008; and
  3. Low growth scenario (Series C), which assumes low assumptions for fertility and net overseas migration.

The assumptions underpinning these projections are once again provided in the table below:

And the projected trajectory of Australia’s population under these assumptions is shown below:

Before we can undertake an examination of demographics and asset prices, we first need to know which age groups own Australia’s housing and financial assets. Thankfully, this information is provided in the latest ABS Household Wealth and Wealth Distribution survey, albeit for the year 2005-06. For the purpose of this analysis, I have assumed that the share of assets held by each age cohort is unchanged today from what it was in 2005-06.

First, consider the breakdown of housing assets by age group:

According to the ABS data, the Baby Boomers – those born between 1946 and 1965 – hold 45% of owner-occupied dwellings and 51% of other dwellings (i.e. investment properties and holiday homes). This is despite the Boomers representing only around 25% of Australia’s population. Moreover, those aged 65+ hold a further 21% of Australia’s housing wealth, taking the older cohorts’ (those aged over 45) share of Australia’s housing wealth to 67%.

It’s a similar story in relation to Australia’s financial assets:

Again, the Baby Boomers (45 to 64 years old) hold 54% of Australia’s financial assets, and those aged 65+ a further 22%, taking the older cohorts’ share (those aged over 45) to 76%.

Now that we have established which age cohort owns what, we can proceed to the analysis of ageing’s expected impacts on Australian asset prices.

My favourite Canadian blogger, Ben Rabidoux – who has conducted considerable research on the impacts of population ageing in Canada – recently alerted me to an interesting paper by the Journal of the American Planning Association (JAPA), which discusses the implications of the Baby Boomer’s retirement on American housing prices.

The JAPA’s key finding is that people become net sellers of real estate after the age of 65, while net buying of real estate is most pronounced between the ages of 25 and 35 – when young people typically leave home and form new households.

Regarding the impact of the impending retirement of the Baby Boomer generation – representing some 78 million people and around 25% of the American population – the JAPA makes the following assessment:

What have not been recognized to date are the grave impacts of the growing age imbalance in the housing market. If the elderly are more often home sellers, and are more numerous than the young who are buyers, a market shift could come on quickly after 2010, causing housing prices to fall. Even if prices remain flat, without the investment incentive young households will likely slow their entry into home ownership, worsening the imbalance between sellers and buyers. Once past the tipping point, market adjustments will cascade in virtually every community, as the ratio of seniors to working age adults will increase for the greater part of two decades.

With the JAPA’s observations about net buyers and sellers in mind, let’s see how Australia’s changing age structure is likely to affect Australian housing values under the three ABS population growth scenarios (again, thanks to Ben Rabidoux for providing the below analytical framework).

Net buyers vs net sellers: low growth scenario (Series C):

The below chart plots the actual (pre-2011) and projected (2011 onwards) population in the key household formation age group of 25 to 35 (‘net buyers’) against those of retirement age (65+ – ‘net sellers’), with the ratio of net buyers to sellers shown on the right hand side.

As you can see, the number of retirees (aged 65+) relative to those of key household formation age (25 to 35) is increasing rapidly, with the number of net sellers expected to overtake those of buyers by 2018.

Net buyers vs net sellers: medium growth scenario (Series B):

It’s a similar story under the ABS’ medium growth scenario:

Again, the number of retirees (aged 65+) relative to those of key household formation age (25 to 35) is projected to increase rapidly, albeit more slowly than under the low growth scenario, with the number of net sellers expected to overtake those of buyers by 2019.

Net buyers vs net sellers: high growth scenario (Series A):

Under the ABS’ high growth scenario, the demographic selling pressure on Australian housing is delayed slightly:

Although the number of retirees (aged 65+) relative to those of key household formation age (25 to 35) is also projected to increase rapidly, the point at which net sellers are projected to out number net buyers is delayed until 2021 – three years after the low growth scenario.

What should become clear is that under each of the ABS’ scenarios, the age structure of the Australian population suggests that the demographic demand for housing is likely to slow significantly (albeit gradually) over the coming decades.

The impact of ageing on Australian financial assets is likely to be similar. With a higher proportion of Australians in retirement and drawing-down on their superannuation savings (rather than contributing to super), there is likely to be downward pressure on share and bond prices, and upward pressure on bond yields (long-term interest rates).

It should be noted, however, that these findings alone do not necessarily imply falling real asset prices, since prices are also influenced by other factors, such as income growth, which could compensate for the impacts of ageing. Rather, the purpose of this analysis is simply to highlight that Australian asset price growth will be more difficult to achieve over the next several decades, due to the demographic headwinds of ageing, than was achieved over previous decades.

I will add that constraints on credit growth are also likely to put a break on house prices going forward. Since household debt levels in Australia are already very high, there is limited capacity for households to increase their borrowings. In addition, the cost and availability of global credit is likely to tighten as: 1) the Baby Boomers reduce their holdings of financial assets, such as bank deposits and fixed interest investments, in order to fund their retirements; and 2) indebted foreign banks and governments seek increasing amounts of funding from global capital markets.

More evidence:

The above analysis supports a recent Bank for International Settlements (BIS) working paper, which examined the impact of changing demographics on asset prices (particularly housing) in 22 advanced nations over the next 40 years. The results suggested that ageing will lower real house prices compared to neutral demographics (i.e. where the age profile of the population remains constant) over the next 40 years in all 22 countries in the sample.

The below BIS chart, which shows the demographic impact on house prices over the past 40 years (1970 to 2009) and the next 40 years (2010 to 2050), is particularly relevant for Australia’s housing market.

According to the BIS, as the Baby Boomers reached working age and started buying housing from 1970, they helped to push-up property prices throughout the world. In Australia, over the past 40 years the Boomers increased real house prices by around 30% compared with what would have occurred had our age structure remained neutral. However, the ageing of the Baby Boomers is projected to reduce Australia’s real house price growth by around 30% over the next 40 years compared to neutral demographics. This is because the Baby Boomers will reduce their housing stock as they enter retirement by liquidating their investment property holdings and downsizing, thereby depressing house prices.

Further, the BIS suggests that the Baby Boomer generation has had a similar impact on financial assets, such as bonds and shares. As shown by the below chart for the United States, the Boomers have driven-down bond yields (left panel) and driven-up share price-to-earnings ratios (middle panel).

But, like for housing, financial asset prices are likely to come under pressure when the Baby Boomers retire and begin selling their assets to fund their retirement.

The impact of Australia’s changing demography on asset prices and investment is a topic that has to date received little attention from the commentariat. This is possibly because demographic shifts are inherently slow moving, so their impacts are gradual and tend to go unnoticed for extended periods of time. Nevertheless, these longer-term dynamics are significant and are likely to significantly alter the growth trajectory of asset valuations in the decades to come.

It therefore pays to consider Australia’s changing demographics when planning any long-term investments.

Cheers Leith

[email protected]

Leith van Onselen
Latest posts by Leith van Onselen (see all)


  1. The_Mainlander

    Great article Lieth, thank you.

    I guess that ‘property’ is not really a true ‘investment class’ that Australians would like to think of it as.

    Looks like a very-very long period of negative or flat RE market if Baby Boomers are lucky.

    Surely this will have a serious affect on their incomes as they try to liquidate their bricks and mortar… Baby Boomers could end up being far worse off than they had ever envisaged (buuilding up the cost of housing stock and paper retuns with the RE up-up-up!) as they close the loop on what you have eloquently shown here that they started in the 1970’s.

    Thank you great food for thought.

    • It would be really interesting for someone to do a comparison of business owners selling out due to retirement, after all small business does employ a large percentage of workers. would the same people wanting to sell homes also be wanting to sell their business? what effect would this have on employment if the sellers couldnt find buyers?

  2. All of this is just fodder for populationists like Bernard Salt. When policymakers read stuff like this their only response is to raise immigration which simply kicks the can down the road.

    • True, but I reckon that can is out of kicking range now. There is an ill-wind blowing across much of corporate Australia. Don’t for a second believe the crap about skills shortages. Many corporations are stealthily implementing headcount freezes or opting for outsourced models simply because thay can see trouble ahead.

      I wouldn’t be surprised if we see some significant increases in unemployment by Q3 this year. With that as a backdrop, it would be a very brave Governemnt that pushed for an increase in migrant intake…..

  3. I understand how hard is to make these projections but ABS population projections are always wrong. They are done by projecting short past into the future without any serious consideration or adjustments based on non-statistical information (gov policies, economical or cultural developments …).

    In 1997 they predict Australia will have between 23.5m (series I) and 26.4m (series III) residents by 2051. In 2006 they predicted 24.9m (series I) to 33.4m by 2051. The latest one predicts 30.5m to 42.5m by 2056. These are not small adjustments but rather huge errors (<25%) that will affect gov policies if based on these.
    They also miss-projected average household size (very stable slow changing number): in 1996 they projected average household size to fall from 2.6 in 1996 to 2.4 in 2011. In 2001 they predicted household size will decrease to 2.2-2.3 by 2026 (2.5 in 2011). Instead average household size even slightly increased between 2001 and 2006 and it is still around 2.6. They didn't not take into account rising house prices and other economic events.
    ABS predictions could be used for short term estimates (between censuses), but anything beyond that is simply speculation. This is why they should not even issue these long predictions.

    • Don’t blame the ABS. The Howard government raised immigration quota, which is something that statistics and trend cannot predict.

      • i think the point being made is that you can’t predict what external forces will impact on population growth so outside of a short window the numbers are garbage and a bad idea to rely on them. A bad forecast is more dangerous than no forecast when the users of the information don’t understand the shortcomings of that forecast (which is the case 95% of the time)

      • Howard’s strategy? Immigration up. labour costs (pressure) down. House prices up = Re-election assured.

        I don’t underestimate the preparedness of our politicians to trash the economy and the living standards of Australians in order to retain power.

    • I don’t think the ABS refers to these numbers as predictions or forecasts. They are called projections for a reason. The projections simply show, based on a deterministic model, what the outcome would be given the set of assumptions used – nothing more nor less.

  4. UE,

    Another great piece of analysis.

    I agree wholeheartedly on the housing side.

    In regards to other asset classes, there is definitely a demographic headwind but I am unsure that it packs the same punch as with Aussie housing.

    Firstly, equity and bond markets are more globalised than property and I would have thought there would be a decent proportion of it owned by investment vehicles that source their capital from countries with more favourable demographic profiles.

    Secondly, I think there is a big relativity story here between asset classes. When the baby boomers retire it is unlikely they will just cash out their super and put it under the mattress. They will need to stick it in annuity style assets that provide a decent ongoing cash yield to live on, so i think fixed interest, commercial property and the like will do a lot better than equities.

    • Where is the commercial property going to come from? Are they going to buy that 200m2 warehouse down the road, a group of shops or invest in REITs?
      REITs are on the nose – especially the retail trusts with the on slaught of the internet and consumer deleveraging. As for small business being able to occupy that little group of shops or warehouse – I doubt it will exist in its current form. Large/heavy industry is also in decline so industrial REITs are a doubtful starter.
      Sorry, I just don’t see it – investment in commercial property that is.

      • Johno,

        It’s not so much what individual baby boomers decide but the institutions that they have their funds with that will make the asset allocation decisions. If you look at the share or unit registers of all the blue chips stocks, debt issues and major commercial assets, alot of it is owned by insto fund managers on behalf of super funds of OS based pension funds.

        So when the BB retires, they will be looking for annuity style investments being offered by the big name wealth managers or their own super fund might offer these products. What sits behind these products is assets that generate significant income yields like corporate debt, commercial property and bonds. So by investing on income products, BB’s will be inadvertently shifting their allocations to these assets even if their not fully aware of it.

        • Once retirees realise the negative returns in all annuities except a cash based one (and maybe bonds), there will be a rush to the exits, exacerbating the effect.

          Adam – you sound a bit naive to what is about to happen across not just the western world.

          This is a world wide problem with massive implications for all countries – rich and poor. We have never seen a sustained period of negative growth (try 10 to 12 years unabated).

          Ironically, immigration is a significant part of the solution, of which I suspect Bernard Salt will talk about no the ABC conversation hour today 12noon (Melb). He will speak about the special generation today – the ones that will foot the bill for what has been caused through massive population growth (and then the end of the period due to contraception – I don’t think he will mention this, he seems a bit blind to this).

  5. OK. The BBs liquidate by selling the PPOR….. So where do the proceeds flow to?
    The stock market? Too risky.
    Rental properties? Maybe. After all, it’s Bricks & Mortar ain’t it?
    Berths in retirement homes? Quite likely.
    Downsize? For some.
    Grey Nomads? Growth industry until petrol/diesel hits $4 a litre.
    Precious metals? For bravehearts only.
    The banks? For sure. Won’t beat “inflation” though.
    Bonds? For “sophisticated investors” (and we know how they get burnt – with monotonous regularity).
    Under the bed? For the paranoid few (likely to become more numerous over time)
    The kids? If they’re lucky.

    When you moil through all of the above I guess that it is likely that freed-up boomer money could well become more freely available to the X and Y generations so that they too can be suckered in to borrow in order to play the nesting game etc.

    That is, if they can find a job first.

    • Hi Zippo,

      “Precious metals? For bravehearts only.”

      The Keynesian economists would agree, but those from the Austrian School of economics probably won’t with what’s heading our way. I lean towards the latter school of thought ‘cause the other one is currently losing control.

      Just my 10c worth.

  6. Sandgroper Sceptic

    Great article. So stocks don’t always go up either?

    Would the $ of funds leaving Superannuation accounts (representing BBs cashing out or taking their annuity pensions) be greater than the $ coming into the system? Obviously stockmarket moves would have a big short term influence but if Super balances grow ever more slowly and then flatten and decline that would surely mean a falling Aussie stockmarket, assuming everyone maintains their “default” high stockmarket allocations. The account based pensions are mandating a 4% minimum withdrawal and most BBs would need to take a cash amount at retirement for either the big holiday or to pay off any debt leftover.

    This spells trouble for all of the ticket clippers feeding off the Super train. And how does Shorten’s Sovereign Wealth Fund look based on this article…

    • Government at one point (sooner rather than later) will limit the amount you can take out of your super as a lump sum and steer superannuation towards annuities based… ie Monthly amounts sent to you.

  7. I have just come back to Australia to live after 13 years away and am really struck by the change in population mix. There are far more “foreginers” in our society now than back then, and they seem to be doing just fine and making a tremendous contribution to our social evolution, economic aspects included.

    The gap in living standards and social amenity (and I am not talking about the existence of a basic social support network – it’s less subtle than that; you don’t have people shooting at you in Australia just because of your tribe, colour or religion) between here and developing Asia/Africa is monumental, and will more than compensate for the changing demographics of the recent custodians of this economy.

    Having lived in Asia, North Africa and the UK (itself a magnet for those seeking a better life), I am pretty sure that an investment in Australia is a very safe bet cf. any other asset class I can think of. And the good news is that we all get to benefit from the diversity this brings to our own doorstep!!

    You can cast all this in terms of net immigration levels, political realities etc etc if you want – but Australia is an open society that made the decision to welcome people in some 240 years ago, and the realities of their family connections alone will sweep aside any of these short term distractions.

    Stuart F.

  8. There is an inverse relationship between real interest rates and the price of land that is always true over the long run: low real rates drive up the price of land, and high real rates drive land prices down.

    We have experienced a phase in global economic history in which the cost of manufactures has been driven down by the industrialization of China and India, and the entry of their low-paid workers into the global labour market.

    The industrialization of Asia initiated an era of low-inflation on a global basis, and drove a very prolonged period where low interest rates could be sustained without provoking high inflation.

    These low interest rates – that is, a period of abundant and low-cost credit – were responsible for the housing booms in Australia and elsewhere.

    The era of low retail interest rates and easy access to credit is over. Rates are going up. Credit is hard to get. The obverse side of this coin is a trend reduction in the price of land.

    This has already started in Australia and will soon become entrenched….imho.

    In Australia, we should consider what the interest rate environment will be like when the AUD eventually comes down to earth, and we start to import inflationary pressure again. The portents for the property market are almost wholly negative.

    • Interest rates will come down when the credit bubble bursts – and one might argue we have come to that point already.

      Check the USA – the Fed rate has been at 0.25%, unfortunately the rate of risk is so high that their commercial banks don’t lend under 8% – there is a huge message in that, they understand the landscape ahead.

      In a period of sustained contraction risk will be managed tightly by the banks – and in the process their share prices will suffer enormously.

      There is a massive period of readjustment for the western world ahead, and in turn third world countries that supply to it.

      The reality is demand is the more important factor, not supply – we are seeing the peak in world wide consumption right now, in fact I think we are past it – leaving a 10-12 year period of contraction.

      Look out below. We are about to pay for the introduction of contraception in the 1960’s – overlaid with our predictable spending life cylce which peak at 47 years of age.

      Leith – when you going to show the graph of birth rates and hole created by the intro of the pill – defining the X Gen?

  9. Currently 25% of our homes are lone occupants and projected to increase to 33%, as the boomers hang on….

    • First sensible comment I have seen. The BBs (at least those that I know – our friends & confreres) ain’t going nowhere. Except to the rest of the planet of course.

      Sell the Homestead? Why? Downsize, but the kids & GRANDKIDS still use it.

      Retirement Income? Already got it! What the hell do you suppose we have been doing the last forty odd years??

      Spend it? Absolutely. Mostly o/s!

      Leave to kids? Why? They got a very generous whack for 20+ yrs. Our turn now, they can have what’s left!

      Seriously, I would not lay too many bets upon this selling Investment Prop crap – that is strickly for wankers. What the BBs we know have – THEY KEEP!
      Hint: as in rent, swap(holidays), sell to kids …

      • I am wondering about this, too. Some BBs of course may downsize their dwelling, but will they be in a hurry to sell their investment properties if the mortgages are paid off, and they’re getting the rental income?

        • No, if they have positive yield thney will hang on to the IP.
          However, if it is a NG’ed IP, then they will not want it in retirement, so NG will go as the boomers will not want it anymore after they retire. What the boomers want, the boomers get…..

          Remember, that boomers know that the PPOR is not counted in the asset test for pensions, so why downsize?

          • Once retirees get a sniff of falling prices and on set of a sustained downturn, watch the selling intensify.

            Some of the posters ought to get their head of the sand – the pendulum has swung the other way – retirees are conservative buggers … cash has a massive gravitational effect – regardless of asset class!

            Once housing prices head south – look out.

    • They die at an average age of 82 for men and little older for women (taking out younger deaths).

      At 78 years of age, they start moving en masse into a sibling’s home, a nursing home or the cemetery early.

      The point of inflection re: births was 1933 and then went up at an angle of 60 degrees for 30 years when the pill was introduced in 1962.

      78 plus 1933 = now = more and more people making the move, unabated for 30 years to come with increasing numbers.

      Once this effect takes effect … and the early adopters sell up, you have a cocktail for property disaster (given the current unsustainable levels).

      I reckon a 50% fall by 2015 – until then, cash!

  10. Did’nt dem dar Canucks stick the old fogies on ice flows?

    Or is the modern terminology nursing homes?

    What super, what assets, etc? Any government big enough to give/allow you it all, is big enough to take it all.

    The cover note: It’s in the national interest.
    No treachery is beneath the statists mind.

    • “Treachery”? I don’t think it will be that so much as just plain “running out of money/finance/options”. No bunch of politicians in a democracy are going to “betray” the oldies (look at the voting demographic they represent, and getting stronger) without also being in such dire straits that they also have to drastically slash spending on health, education, security, public works, etc.

      Even a nasty “revolution” like banana republics have, is unlikely to ever “target” oldies exclusively. There are usually other “class” scapegoats.

  11. “upward pressure on bond yields (long-term interest rates)”

    Leith – can you explain why please.

    I see long term interest rates down around the current Fed Reserve price for a sustained period (to stimulate the decaying economy).

    Are you suggesting banks will rate risk significantly higher and peg their loans at a similar mark up to what is going on in the USA? As in 8%.

    I suspect our banks will settle their rates around 6 to 7% as the risk will be significantly higher, meaning long term rates will stagnate, i would err to the the downside to be honest as this period of contraction bites.

  12. Apologies for posting again, but it is relevant to the discussion on demographics.

    Colin Clark’s magisterial 1967 book, “Population Growth and Land Use”, analyses numerous positive feedback loops in economies as populations are rising, that go into reverse when the population growth levels out or falls. This is even more significant in its economic effects, than resources like oil becoming scarcer and more expensive.
    I am only saying what I do here, not necessarily to argue for “more growth”, but to try and alert people to the kind of tough political options we are going to have to confront, that will go way beyond superannuation liabilities. The end of growth, either planned or unplanned, means serious recession and falling income, not equilibrium at the “status quo”.
    The development of free markets and the creation of wealth requires, along with
    a culture that encourages trust and co-operation; “connections” via transport
    and communication, between potential participants in exchange and trade. These
    connections can be the result of proximity (through density), as well as by roads and other transport infrastructure.
    There is a limit to how much density is achievable as a substitute for transport
    infrastructure, because the production of low-density rural areas, especially
    food, has to be transported to the workers in urban industry. There is actually a correlation between the “density achieved” in urban areas throughout history, and the provision of roads in those urban areas.
    Population growth is one way in which densities are increased, and “demand
    pressures” result in rural land being used more intensively and efficiently.
    Population growth disturbs a certain “status quo” that might have existed previously, where rural production levels were regarded as “satisfactory” to both the producers and the consumers of the produce.
    As population densities increase, and rural production increases, a number of
    efficiencies are realised.
    There is increased competition, and reduced oligopoly, monopoly, and monopsony exploitation.
    Increased specialisation becomes possible, because of a viable number of
    customers for the products of the specialist. “External efficiencies” are
    realised by increasingly networked producers.
    Economies are realised in infrastructure, social institutions, and government. Roads, bridges, harbours, etc, can be utilised by increasing numbers of people without capacity increases being immediately necessary. The same goes for churches and clergy, courts and lawyers, hospitals and doctors, other professionals, government bureaucracies, public buildings, educational and other institutions. This also allows for important advances in sanitation and health.
    Labour productivity growth occurs, and less additional “capital” is required for
    each additional unit of output. The utilisation of land and resources previously underutilised, is a “substitute for capital”.
    Nevertheless, return on capital increases, AND capital formation is also
    increased. A rising population results in increasing returns to existing
    investment, encouraging more investment. Less investments “go bad”, because
    there is a rising number of customers for whatever products or services the
    investor and his competitors provide. More production capital is utilised (and
    even worn out) before it becomes obsolete.
    The products that result from new investments, inventions, and efficiencies, are easily absorbed in a rising population; as are the redundancies and relocations that might be necessary. Younger people, of which there are more, are more mobile and receptive to change. The increases in wealth creation and demand, make society more amenable to changes in employment patterns as the result of advancing technology and methods. There are more valuable “positions” to go around, so that change is less regarded as a threat by those occupying positions of advantage.
    Younger people tend to accumulate capital, while older people tend to “draw down on it”. Larger families result in pressure on the parents to save more, and on the children to provide for themselves because their inheritance will be split more ways.
    (Note: Julian Simon added a further thesis to Colin Clark’s: that a higher
    population includes both more inventive geniuses, and more people to purchase
    and enjoy the fruit of those creative geniuses).
    A high proportion of government spending is inflexible to rises and falls in
    population. This spending is more efficient if population is higher. Much
    government spending is extremely difficult to reduce even when falling
    population justifies it.
    If population is falling, there is much greater pressure on politicians to cheat
    by inflating the money supply, as the fewer numbers of young simply cannot
    sustain the taxation levels necessary to keep the government running, apart from
    the burdens of caring for larger numbers of elderly.
    Younger people are rendered less able to save, capital is “drawn down on”,
    returns on investment decline, more investments fail, investment declines.
    Population increases demonstrated beneficial effects in Holland in the 1500′s, Britain in the late 1700′s, and Japan in the late 1800′s. Holland and Japan were economic successes while importing most of their food. A LOWER percentage of the workforce in agriculture, correlates to wealth increases. These increases in population and in wealth, result in a freer, more mobile society.
    Ancient Rome in its decadent phase, illustrates the effects of falling
    birthrates, including increased taxation burdens and monetary debasement.
    Declining populations, in ancient Rome and in Europe in the 1400′s, brought
    about a simultaneous shortage of workers, and yet lack of demand. Many people clung to their source of diminishing income, becoming protective and demanding restraint of competition; others had serfdom imposed upon them by the government, their freedom to relocate and change their livelihoods being removed. These seemingly contradictory effects are the result of a reversal of the “virtuous cycle” described earlier, that occurs when population is increasing.
    France, in the period from from the revolution onwards, also illustrates economic decline consequent on falling birthrates.
    In underpopulated lands, and where population is falling, the people themselves become more “protectionist” in sentiment, and more vulnerable to illusions regarding “planning” and regulation of production and prices. This only worsens the vicious circle of decline.

  13. We also need to add the the governments always seem to surprise us, They can make it harder for housing development (After all there is over 50,000 houses for sale on the market in Melbourne, so they cant be a shortage) This would stabalise/increase house prices (hence government income/taxes etc), AND The governments could also increase the age of retirement (again) especially if people are living to the age of 93.