Ageing headwinds for housing

By Leith van Onselen

Over the past few years, I have written a series of articles arguing that the ageing of populations across the globe would have major adverse implications for consumption spending, asset values, and government revenues and taxation.

I have also argued that the impacts from ageing would likely be most acute in Western Nations, although some developing countries, most notably China, would also be negatively affected.

The problem stems primarily from the coming end of the demographic ‘sweet spot’. That is, where there is a high proportion of working age people supporting only a small pool of dependents. Such an advantageous age structure has effected almost all of the world’s major economies and produced a population structure optimal to economic growth – that is, where the largest segments of the population were neither young nor old, but in the middle (i.e. working age).

These demographic sweet spots can be seen in the below charts, which show the dependency ratios of each major economy – i.e. the ratio of the non-working population, both children (< 20 years old) and the elderly (> 65 years old), to the working aged population.

In the Anglosphere, of which Australia is a part, the dependency ratios fell steadily in the decades to 2010. However, in the decades ahead, their dependency ratios are projected by the United Nations to rise steadily as the baby boomers retire and their populations age:

In some major European countries, as well as Japan, their populations aged earlier and their dependency ratios bottomed in the 1990s, which might help to explain some of the economic malaise currently being experienced across those regions:

One area that is likely to be adversely affected from population ageing is house prices. Last week, Citi’s Global Head of Credit Strategy, Matt King, produced the below series of charts showing the relationship between dependency ratios and house prices in a range of countries. King explains these charts as follows (from Business Insider):

“It’s what I like to call “the most depressing slide I’ve ever created.” In almost every country you look at, the peak in real estate prices has coincided – give or take literally a couple of years – with the peak in the inverse dependency ratio (the proportion of population of working age relative to old and young).

In the past, we all levered up, bought a big house, enjoyed capital gains tax-free, lived in the thing, and then, when the kids grew up and left home, we sold it to someone in our children’s generation. Unfortunately, that doesn’t work so well when there start to be more pensioners than workers.”

Of course, housing is just one area that is likely to be adversely impacted from population ageing. For more analysis of this issue, check out the following articles:

The Baby Boomer Bust

The Demographic Time Bomb

Ageing and Asset Prices

China will grow old before it gets rich

Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.

Comments

  1. Gold just gold………neg but still gold.

    10yrs before we legalize elective death of over 65s lol
    In the UK they have winter to thin out the old and unproductive, cut pensions and have people literally freezing to death in their homes. Harsh but true.

    This is a huge issue as they have a massive voting base to every other demographic and so can tilt the policy of government in their favor. They could well drag us to old Davey Jones’s locker!

    • Just like the elderly die of heat stress here because they can’t afford to turn their air-cons on during peak times. I recall one summer in Adelaide there were dozens of deaths over a protracted period – the irony of so called ‘smart’ meters is that it will be even more expensive to turn on air-con in peak times so it’s likely we’ll see more such deaths in the future.

      • I remember that too. I thought the point of smart meters was to create rolling blackouts during peak periods, over which the consumer has no control. I, for one, will never allow one to be installed if I have the option. I can control my own energy use, thanks.

      • It’s too late for me – here in Victoria our wonderful benevolent State Government dictated that every Victorian MUST have a smart meter so they came and installed one a few months ago which I now must pay for in installments over the coming years. Lucky me. Victoria leads the way in gouging monopoly consumers on behalf of the (mostly) foreign-owned power companies.

      • Is there any actual evidence they died because they couldn’t afford to use Air?

        I would have thought impaired thermoregulation and decreased thirst sensation would have more to do with elderly heat related deaths.

      • Affordable A/C has only been around for a decade so it’s not quite the same scale of issue as heating in the sum-zero UK!

        Prior to cheap residential AC the popular option in AU was a back yard swimming pool! Failing that, most community swimming pools are still open! If old people die from their own stupidity, that’s natural selection at work!

      • Additionally, at a local conference a few years ago a scientist who studies thermoregulation in mammals showed how heat deaths are increasing and will continue to increase with global warming.

        This is due to an increase in the number of “no activity” days, where the combination of heat and humidity mean that the elderly are unable to thermoregulate sufficiently to cool down, even just doing simple things like gardening or walking.

      • Of course where the cost of housing has been forced up by urban planning of the kind that the UK has had since 1947, far more people live in low quality and unhealthy homes, far more people are lifelong renters living out their retirement in serious poverty, and far more people have less money left over from the rent or mortgage, to pay for heating.

        Maybe killing ’em off as fast as possible by the unintended consequences of utopian leftwing “we do SO care for the poor” urban planning policy, is the solution to the problem, more people will be able to afford houses once the prices collapse, and things will balance themselves.

  2. Thanks Leith
    Some sweet charts there
    I wonder why Irelands dependency rate flattens out so much compared with the rest?

      • Well they are coming ‘here’.

        The whole of Perth now has irish working their hospitality scene.

        Thanks to Ireland’s pernicious debt laws, there is a diaspora of youth away from Ireland.

      • Darwin is full of drunken Irish workers.

        They are causing huge headaches for police and property owners here. Fighting and destruction of property are the main offences. One was even stupid enough to kick a local politician in the butt while he was filming a TV interview. The Irishman did it for a bet of $200 from one of his mates.

        They are here on 457 visa’s because there’s no work in Ireland. One Irish guy I was talking to was home sick and said his mother had told him to stay as there was nothing for him at home.

        Guess this will change when the unemployment rate goes up.

      • +1 Darwin is a very expensive and not very pleasant place to live without a job.

        No offence intended Bubbley

  3. Hope the old can die quicker as they have tied up a lot of properties through investment.

    Muzzer said winter thins some of them out in the UK, so lets hope for more global rises in temp’s so we can thin out a few over here.

    • +1 for cheap houses and more Soylent Green. It pains me to see oldies hoarding big houses while us younger generations must pay outrageous prices for a basic home.

      • Probably not as much as it pains ‘oldies’ to see the value of their retirement nest egg resting on the precipice of a house price collapse.

        Renting can be joyous in times like these; PMs help soothe the pain of inflation.

  4. Nice charts.
    I often wondered whether it would be possible given that the state dictated only 2 (odd) children per head whether you could reach an equilibrium where the working generation could support the older ones. Of course, there would have to be a re-distribution of real estate in terms of relative occupancy…

    On second thoughts, limiting the population is thought by many to be Orwellian here – so, I guess it’s carry on with the population Ponzi scheme, with it’s gradual decline in living standards as we queue for everything. Hope for the best and expect the worst

    • Natural increase isn’t far off replacement numbers in Australia. Our population increases are fueled by net migration.

      • Large proportion of net migration is temp residents e.g. international students, temp workers, backpackers and dependents. Gross population is not the issue but qualitative i.e. Oz baby boomer bubble caused by families having 3-4+ children 1945-60. Migration and population general headline numbers should not be issue, but qualitative e.g. lower birth rates balances out demographic (Ponzi) bubbles, in addition to planning e.g. superannuation starting to make real impact in future (those who started high contribution rates when first entering work force). Immigration, international education, backpacking industry, temp skilled workers etc. can all be good for Australiam, neither “gloom & doom” nor “runaway population growth”.

  5. Thanks, Leith. Exactly.

    And Australia installed a land price turbocharger in negative gearing, sold to late middle age middle income earners as the path to financial freedom. Actually, it was a way of crystallizing their life’s income so as to draw commissions and fees on that maximum potential.

    The unwinding will be agony.

    Don’t Buy Now!

  6. Is there a risk of BB simply handing the IP over to their children nd prolonging the pain?

    What’s the go with inheritance tax these days?

    • CGT becomes payable when the asset is sold, so theoritically that can happen the BB passes it through, however there is also exemptions if it is sold within 1 year and not rented out.
      i suspect though most kids would have debt and therefore the property is a source of capital.

    • If BBs who have retired early and will run their Super down to be eligible for the medical card and $1 of pension at 65 have an investment property, do they gift it to their children or put it in a trust in their children’s favour at 60 so it doesn’t make the BBs fail the assets/income test on their pension calculations? I understand the count back on gifting is 5 years.

  7. Great charts but is it the dependency ratio or the absolute sizes of each of population and the working component that matters?

    My suspicion is that it is the absolute size of the working population that has more influence, particularly the higher spending segment of the working population.

    If the working and spending population segment size remains the same, and absolute population size grows I suspect that (ignoring resource sector which is really asset sales to foreigners) GDP grows but the composition changes in line with the changes in the dependency ratio.

    US research I read on Seeking Alpha highlights the role of the segment aged to about 45.

  8. Ok a suggestion that isn’t likely to be popular – legalize voluntary euthanasia for anyone past retirement age? Maybe even provide a tax benefit for the surviving family, and a promise to count the deceased’s vote towards the political party of their choice for 5 to 10 years or something?

    Not suggesting a mandatory Logan’s Run style ‘Carousel’ approach. But I think at least some people hate the idea of becoming a burden on their family (and to a lesser extent the government :D). Im sure we’ll all be paying to keep alive some that want a more dignified and family-helping end, and from a cold logic perspective that doesn’t make much sense.

      • Urgh what the hell. People complain about the nanny state when they want to make cigarette packets bland, but this goes on without resistance?

        What’s the motivation behind the censorship? Sounds to me like another example christian/catholic beliefs being subtly forced on Australia, despite the well-preached lines about diversity of culture and religious beliefs.

        Double urgh.

    • Maybe even provide a tax benefit for the surviving family, and a promise to count the deceased’s vote towards the political party of their choice for 5 to 10 years or something?
      That’s going to be a bridge too far (I would hope).

      • Haha yeh agree actually. Probably want to incentivise it some way though if you want to get the punters in 😀

  9. Everyone will just have to work for longer.
    Those that are relying on the age pension will have to wait till 67 (in Aust) and that is likely to increase.
    Those that are self-funded will need to recover what they have lost due to the GFC and situation in the US and Europe.

    • Yeah, but it doesn’t kick in until 2027, when most of the baby boomers are retired.

      I mean that’s like drawing away the plan when it’s too late.

      We have a demographic bubble that is underfunded for retirement.

      They are applying the solution to a group that will (should) have much more retirement savings and a lesser demographic strain.

      It’s another boomer policy to spend someone else’s money.

    • When you have a lot of people losing their jobs immigration causes social unrest, even here. There is only so much immigration the gov can do before people start getting pissed off.

      Greece is a good example of the extreme. As for job losses, I don’t believe gov reports for a second, i would rather look at Roy Morgan for a true account. Just because some one gives up looking for work, does not mean for some reason they are no longer counted in unemployment figures.

      • Roy Morgan was also telling the world that our unemployment rate was over 10% around 2001 – 2003 but it wasn’t.

      • Seeing how the ABS guesstimates unemployment, there is a chance Ray Morgan may have been right then too.

    • Immigration is unlikely to increase the overall net wellbeing of the existing base of citizens when the social costs and dilution of mineral wealth are taken into account.

      The marginal capital and running costs of infrastructure for water is also a concern as shown by the desalination fiascos.

      Overcrowding, loss of farmland, crime, childhood obesity partially through loss of facilities for organised and informal active recreation are all relevant considerations.

      Focus on what maximises modal or majority per capita overall net well being of existing citizens.

    • What happens when those immigrants retire? Doesn’t that create an even larger problem? Unless the solution is increasing immigration ad infitinum…

      • But if you’re point was that governments will stupidly try this and have already started, I agree.

      • Absolutely.

        The government (regardless of who it is) will push for higher migration as much as it possibly can.

        It is the easiest solution to a politician who finds real solutions to a fading debt/asset value economy a challenge to grasp or communicate.

        The limiting factor of course is that human populations are generally not keen on migrants. The massive migrant nations of the world (Canada, USA, Australia, South America) being the best of a general human preference for xenophobia.

        Thus ‘handling’ the politics of migration has its own challenges and strategies. The ‘race card’ is usually played fast and loose by both sides of the rapid population growth argument.

      • “The limiting factor of course is that human populations are generally not keen on migrants.” Limiting factor? When did the government ever ask us whether we wanted more immigrants or not? They just keep bringing them in regardless of how the general populace feels about it, knowing they’ll prop up the Ponzi scheme.

        And you’re right – any time anyone suggests we slow down the immigration rate, the word “racist” is bandied around, so it seems we must all suffer in silence as the roads get more congested, the facilities in place are more strained and housing remains expensive. But that’s the idea, always, to keep housing expensive.

      • +1. Kicking the can down the road fixes nothing, it just creates a much worse problem in the future by not resolving the lesser evil one today.

      • There are no finite resources in the economists’ world 😀

        “Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist.” –Kenneth E. Boulding

      • If Australia does what is being mooted in the UK, i.e. move back to the pre 2006 definition of population (according to the OECD), then international students will be removed from the net overseas migration, then suffer from the European population phenomenon found in various countries. Stagnating or declining population (& economies)…. which many anti immmigration and anti population growth Australians seem to want?

    • Peter, we can not rely onj immigration as the ageing of our nation is unprecendented and the politics of immigration are changing rapidly. We will have more older voters and they are likely to vote anti-immigration.
      In many ways immigration is kicking the can down the road. 4.1 million boomers born here and now we have 5.3 million. 80% will require full or part pensions.

    • Peter what use is immigration when we bring them here, park them in the big cities, Spend fortunes on the extra exponentially rising infrastructure costs, and yet have no industrial jobs for them. All we’re doing is creating more PS jobs, more restaurants and coffee shops, more lawyers, more retail shops etc. All this just adds up to more debt.

      • Without economies of scale we will never have industry to boast of. In fact it’s unlikely that our manufacturing can ever compete with other nations. That writing has been on the wall for decades.

        However with the right policies in place we can compete in niche markets, it’s up to us to determine how. Throwing in the towel certainly won’t cut it.

      • I must confess I tend to share your pessimism regarding manufacturing though population size appears not to be the critical factor.

        After all there are only 127 million Japanese and that is sufficient to build all manner of hi-tech, low tech, industrial and consumer manufactured goods.

        An even better example is Taiwan with 23 million.

        The biggest obstacles to manufacturing are not population size. China Bob has been pointing to a few of the real ones recently.

        For what it is worth I believe tax and other rewards showered on unproductive over investment in housing has a big part play.

      • ” we can compete in niche markets ” Really! Which ones, and if so, why aren’t we doing it now? Answer: We can’t , won’t and don’t. Why work, when wealth can be made by sitting on static assets….and waiting? Work , niche or otherwise, is all too hard for us. That’s why Taiwan etc are ahead of us – they do want to work. We will too, but only when much lower wages FORCE us to.

      • We can compete in food production, education, health care, tourism – all of our recent success stories can be successful again with the right policies in place. There will be other opportunities, there always are.

        The fact that we may never be competitive in car production, electrical goods, mass made consumer items, doesn’t mean that we can’t find our niche in the new world. It won’t happen over night and it won’t happen until our political leaders start to understand the issues, but it can happen. I would rather be in our position than a score of European nations.

        As Ed Harcourt once sang “I’m in a non-defeatist state of mind”

      • Tell that to Swiss population 7 million, Austrian 8.4 million, Dutch 16 million. This is a silly argument. 20 million population is good enough if you really want to do something. Luxemburg population is 500.000 and never heard them wanting more or needing more. They make among other things the Hilti tools. Everyone knows them. A global leader of value-added, top-quality products for professional customers in the construction and building maintenance industries. Go figure out!

      • Good post, the Swiss population in 1968 was 6 million, now it is 7.5 million.
        The big issue is whether you are a creditor nation or a debtor nation.
        As Australia is a debtor nation we import people so that we dress our GDP figures, but we dont take into account the increased cost of infrastructure or loss of productivity due to high costs of land or even transport

      • But European nations have a more condensed population than ours, and they have easy truck access to the rest of Europe. They have also had hundreds of years to establish trade links and industries.

        Whilst I’m optimistic, I do think that we have different strengths and different weakness’s than European countries, so their model won’t work as well here.

        But there are always opportunities, so it’s up to us to identify and develop them.

      • Peter…but that’s not what we do. We just bring in migrants and park them in cities with expensive infrastructure. There is no other plan!

  10. Yes – Immigration that age old cure when every other option fails to keep house prices elevated.

    Absolutely Brilliant !

    • Bob we have had consistently high immigration since 1788 – this is hardly a new policy, it’s a continuation of our existing policy – why wouldn’t it be a factor?

      Should we ignore it?

      • R2M, Peter knows it. It is just that he, as a mortgage broker has no other solutions to create tailwinds.

        The headwinds are due.

      • Mr SquiggleMEMBER

        Hear hear:

        Migrants have a head start in the aging process. They reach retirement more quickly than non-migrants, and their retirement has to be funded by taxes from non-migrants and earlier migrants.

        Fixing the aging population issue with more migrants makes as much sense as fixing a debt problem with more borrowings.

      • And your solutions are what – lie down and capitulate?

        Reading comments here is like reading the orbituries page on Saturday.

        Is this where good ideas come to die?

      • Raise the retirement age.

        it is very simple…

        you raise the retirement age, the number of dependents on the right hand side shrink. You burn both ends of the candle where you get more tax payers, and redeuce your future liabilities as they receive a pension for a shoter amount of time.

        inversely, you lower the retirement age, the number of dependents increase.

        it is not a natural law that people are dependent on the right hand side, it is a social construct.

        We as a society are free to adjust it.

      • Mr SquiggleMEMBER

        Peter, I don’t see a reply button on your reply, so hopefully this appears somewhere useful.

        first: I don’t see a problem. What are you trying to fix with millions of migrants? what’s broken that requires such substantial inflows of people?

        Second, my preferred approach is:

        1: Don’t panic.

        2: Deal with the situation as it happens. 2.5 workers to 1.0 retiree by 2050, so what? learn to cope with it

        3: moderate our immigrant intake to reduce the pace of aging

        4: grow up as a nation and learn to stand on our own two feet, instead of relying on imported waves of people.

      • Raise the retirement age.

        I don’t disagree in principle, but employers generally don’t make a habit of hiring people in their 60s.

      • I don’t disagree in principle, but employers generally don’t make a habit of hiring people in their 60s.

        I agree it is a perverse and belittling phenomenom we encounte with this.

        I wouldn’t say the raise the retirement age in isolation.

        I’d be prone to reduce skilled migration, so old job seekers are a ‘take it or leave it proposition’ to employers.

        You want growth, you employ Australian (human) resources.

        We had full employment policies once before, they worked. I can’t believe how quickly it has been forgotten.

        A bunch of guys wearing khaki ensured unneceessary unemployment never happened again after August 1945

        NAIRU doesn’t work.

      • Mr Squiggle, I wasn’t advocating anything, I was stating our current immigration numbers and policy. It would be wrong to not take that into account.

        I don’t believe there is anything that we can’t solve.

      • Mr SquiggleMEMBER

        Indeed you did Peter, I just read back over the original post.

        Fair enough, we have had a policy of high immigration for many long times.

        Its almost like we keep doing it out of habit. I am in favour of reviewing it. Does it make as much sense in 2012 as it did in 1961?

      • Mr Squiggle it won’t matter as much as you think. When I look at the graphs that Leith has provided, what I see is a housing crash that co-incided with a peak in the dependency ratio, but it was caused by a completely different reason, so I consider it a co-incidence and not caused by any decline in the ratio, in fact if it was caused by a decline there would be a distinct lag, but there isn’t.

        However we will have some issues caused by ageing, but they can be overcome in Australia by current levels of immigration.

      • Not exactly.

        If they are young, but not too young, they cut the childhood portion of the dependency calculation out.

        A 20yo migrant who works for 45 years is more valuable than an equivalent Australian born 20yo who works for 45 years. That is, all else being equal.

        457’s are supposed to be rare skills. That implies a high wage in a capitalist world. That means the 25yo 457 worker is even more valuable than the run-of-the-mill 25yo immigrant.

        Cold, but logical.

  11. I think demographics have alot more to do with society and economics than we would like to think.

    Its been a very special century of human existence, with favourable demographics combined with abundant energy. These 2 effects are coming to and end almost simultaneously.

    The effect of the housing market is an example of the larger phenomena that power, jobs and capital is all concentrated in the hands of the older generations, who are seeking ways to preserve these.

    Young people have a harder time getting influencing their society, certainly not in the way that was possible in the 20th century, and society starts to resemble its major constituents. Tired, conserative, static and scared.

    What is needed is a mechanism for older people gradually reduce their power, capital and influence as they age. Careers (and the property ladder?) are commonly thought of as a trajectory upwards only, what we need is a way to go back down.

    • Yep!! Kill the housing market and the value of all non-productive work. Reward those who produce real stuff more.

    • What is needed is a mechanism for older people gradually reduce their power, capital and influence as they age

      You can only vote if you have a job would be a good start.

      But the issue here is chronology. I really can’t believe how many times I need to explain this.

      When the aged pension was introduced, its scheme was qualify at age 60.

      Men had an average life expectency of 59, women 62. It’s payment was 12% of AWOTE.

      It was meant to be income support for those that got there, for the last few years of their life.

      A man who on average died at 59, was very likely to be in a bad when he qualified at 60.

      Now sure, the age now may be 65, but both men and women are living for around 20 years… and collecting 27% of AWOTE.

      They are also viewing it as long-service leave… an entitled safety net. otherwise, why would anyone spend their entire SCG lump sum on some gratuity once they reach a general condition of release?

      The issue is calibration. Say we get a medical breakthrough where we live to 150, you think it is viable to fund 90 years of retirement from a 40-45 year working career?

      The view should be something along the eldest 4-5% should have the rest of us fund their retirement.

      SCG is just a privatised retirement scheme, supposedly merit based.

      • Say we get a medical breakthrough where we live to 150, you think it is viable to fund 90 years of retirement from a 40-45 year working career?

        Yes. Basic food + basic shelter + basic clothing + basic medical care.

        Yes. As long as we don’t overpopulate the planet that should be possible (and desirable).

        Looking around I’d say 10% of workers are currently funding 90% to do useless stuff. Why not let the 90% retire instead?

      • Looking around I’d say 10% of workers are currently funding 90% to do useless stuff

        Well I think the whole crux of the arugment has to be extrapolated out of this statement.

        Go right ahead and expand on this please.

      • That 90% are already retired within any given company. They also become the best political players and mates with the right people.

        They are the ones that place the working 10% into a corner, then burden them with piles of work.

        You have heard the saying, there’s no such thing as a free lunch. You notice who keeps saying that? Its’ that 90%.

      • You can only vote if you have a job would be a good start.

        A dangerous path to start down.

        Why stop at just the unemployed ? Why not limit voting solely to white male property owners ?

    • There is one truth of society/economics that I have realised in the last year.

      Current production ALWAYS supports 100% of the current population.

      Think about it for a minute, and you will realise that no matter what abstraction you put between the non-working and the working, it always comes down to current production. You can’t eat most forms of wealth. Usually that line is used as “you can’t eat gold” to dismiss PM’s, but the truth underlying the statement is that nothing you own can sustain you if there is no current production. Perhaps that was not intended originally, but it is fundamentally true. You can’t eat cash, You can’t eat houses, You can’t eat gold, and you can’t eat promises.

      The Egyptians of Biblical times had realised this. They’d also realised the El-Nino/La-Nina cycle. Their answer was to store some of the current production during the good times for the bad times. Some might call that Keynesian, but back then it was a clear law of nature.

      This is the only caveat to my statement. It IS possible for non-current production to sustain the current population. The sad truth is that it simply does not happen.

      Our systems are not designed to survive failure. There is very little storage of current production for future consumption. Our food banks are laughable by Ancient Egyptian standards. Our abstraction of wealth via assets and financial instruments is as naieve as our unfounded faith in geographic diversification.

      If something goes wrong there is no buffer. No pension, no superannuation, no asset sale, and no cash is going to help the currently non-productive outbid the currently productive.

      I reiterate; Current production ALWAYS sustains the current population.

    • Excellent observations here, rohano. We have abundant statistics but a lack of intuitive interpreters of geography and demographics to sort it all. And of course no funding to do the analysis and publish any results.

      I very much like the comment ” what we need is a way to go back down”. I was a fan of biographies as a kid, and am a bit of a family historian as an older person, and both these things together give a perspective that a lot of people miss in life. Economically, once that last child is born, it would be a good exercise for every family to plot the years ahead, see what might come into play using demographic statistics, and think about the consequences of their actions re work and play.
      All the better for a well-rounded life. This is what I am hoping above all to pass on to my 21 yr old.

  12. The one fact is that the ageing of our nation is unprecedented and therefore making any real predictions is hard at best. Certainly there will be asset headwinds, however I suspect the social unrest will far outweigh the slow deflation of asset prices.

    Even now, in the middle of this debate, no one is talking out our peaking emigration as tens of thousands of 25-35 year olds leave an unaffordable country to go to an affordable one. The bs that the ABS roll out about most returning within one is pure bs. Over 88,000 Australian residents left permanently last year.

    Note : 1/3 of our population growth in real numbers is our demographic momentum, or more people living longer.

  13. It is worth noting that in the first chart, as the BB leave the home planet, the ratios start to adjust back. It is very likely that while we have anti-immigration taking hold, that our population will peak around 2035 and then start to decline.

  14. Mr SquiggleMEMBER

    Great stuff, but there is one comment I disagree with:

    “Unfortunately, that doesn’t work so well when there start to be more pensioners than workers.”

    This is BS. Total Crap. There will never be more pensioners than workers.

    This misinterpretation of the aging issue often comes up and its one of the chief weapons of the population/immigration boosters.

    What is actually expected to happen is a moderation of the workers/pensioners ratio, not a reversal. It is set out in many docs, of which the Treasurers 2012 Intergenerational Report is just one:

    ‘The number of people of working age to support every person aged 65 years and over is projected to decline to 2.7 people by 2050 (compared with 5 people now).’

    http://archive.treasury.gov.au/igr/igr2010/report/html/02_Chapter_1_Economic_and_demographic.asp

    • This is BS. Total Crap. There will never be more pensioners than workers.

      Never is a long time, as it points to what most fail to understand.

      If we start living to 150, then you’ll get this problem if we continue to retire at 65.

      When the aged pension was introduced, there were 27 workers for every aged retiree.

      Now there is what… around 4?

      Supported income for retirement has to be re-calibrated for life expectency, it hasn’t been.

  15. Looking at the graphs of dependency ratios, it seems to me that we have less of a problem than the pundits would have us believe.

    The projected dependency ratios for the future are no worse for us than those of the sixties – and we coped with that. Furthermore, while babies are ALL as dependent as perhaps the worst of dementia patients, not all older people are anywhere near as dependent physically, and many are never dependent until perhaps a few weeks. Babies are ALL financially dependent on the rest, but many older people are financially independent.

    Put another way, what would be worse: a million babies totally dependent physically and financially 24/7 or a million older people needing a daily visit from a district nurse, but who could get by otherwise?

    It seems to me that the issue is how we gear up for it. Raw dependency ratios don’t tell us anything about the degree of dependency it would seem.

  16. thomickersMEMBER

    falling interest rates only accelerates this babyboomer downsizing process.

    House Prices to fall faster with a low interest rate scenario

    • Yes and no, thom.

      Also sucking-in more FHBers with the “increased affordability” myth.

      A dangerous wave to ride.

      • thomickersMEMBER

        we’ve literally run out of FHBs (monetary policy responding lower than expected)

        last week my mate finally got a loan accepted to buy a $600k house. He is the last person in the world you would give a loan to!