- Skills shortages in the aged care sector will likely soon be exacerbated
- An ageing population may impact the housing sector in new ways
- A mindset shift may be needed to ensure housing availability for all
The fact that Australia, and indeed many countries across the globe, has an aging population has been a known challenge for decades.
The most recent Intergenerational Report published in 2021 provides an outlook for the economy and the Australian Government’s budget over the next 40 years. That report clearly outlines how structural trends such as an aging population are an ongoing challenge for the Australian economy and the budget.
According to the report, in 2060-61, 23% of the population is projected to be over 65, a rise of around seven percentage points from 2020-21.
As our baby boomer generation starts to reach 65, we are in the midst of a major demographic transition that is driving a rapid fall in working-age people. It will reduce labour force participation and impact on the housing needs of a growing segment of people.
According to The Demographics Group Co-Founder and Director Simon Kuestenmacher, Western Australia is not immune to this trend.
Mr Kuestenmacher advises that while the mining industry does attract more younger people to the state, overall, the trend of an aging population is just as much a challenge here as in the rest of the country.
He says that the exit of baby boomers from the workforce is a contributor to the current skills shortage, which has only been exacerbated by the impact of the pandemic in the last two years and the flow of migrants out of the country.
“If we look back at the last five-year Census period (2016-2021) by far the biggest growing job sector was for aged and disabled carers. We added around 95,000 of those in the last five years, and there was an increase of approximately 72%, which is huge,” Mr Kuestenmacher said.
“And that is before much of the baby boomer generation even require care, given the oldest baby boomer is still too young, too active, and too healthy at the moment to require care.
“But once people reach their 80s, and the older baby boomers are four years away from that, then things become significant. They will start to require care.”
Mr Kuestenmacher warns that not only will this shift into aged care exacerbate skills shortages in that sector even further, but it will also have a huge impact on housing needs.
While facilitating downsizing will be important to free up larger homes for larger households, Mr Kuestenmacher says there is a major mind shift that would need to happen to get baby boomers out of their family homes and into smaller housing.
“Downsizing does happen, but not at scale because most Australians will tell you things like ‘I want to be carried out of my house in a box’,” Mr Kuestenmacher said.
“People want to age in place, and we will see an absolutely massive boom in aged care services that are targeted at allowing people to age in place.
“That of course will also require home modifications such as ensuring everything is accessible at ground level with no steps, those sorts of features and more,” Mr Kuestenmacher said.
Founder and Principal at McCrindle, Mark McCrindle, says that encouraging people to downsize will be an important aspect of freeing up much-needed family homes, however, there are several real impediments to people downsizing, including Stamp Duty, asset tests and other tax implications for selling property.
Mr McCrindle also points to government control of planning and the constraints on people adapting or changing their property to suit their current needs as another barrier.
“You might have a family with a big ‘empty nest’ property that doesn’t want to move out of the place, but they wouldn’t mind putting a granny flat out the back or maybe knocking down the place and putting in two smaller homes, one for them and one for their older kids with their own children,” Mr McCrindle said.
“But you’ve got planning constraints and developer contributions and other things that put up a barrier as well as Stamp Duty.”
Mr McCrindle also cites federal taxes, pension policies and payment implications that will impact people’s decision-making, as well as superannuation restrictions in relation to investing in housing.
“I think all levels of government could assist in solving these issues.”
Pricing out younger generations
While downsizing is an important issue for the older generation, affordability is an even bigger issue for all generations, not least, low-income earners and young families.
“We have seen prices increase so significantly, even just in the last three years, that it has further priced out the next generation,” Mr McCrindle said.
Mr McCrindle says that while housing diversity is important, we need to get it right, young families are priced out of larger homes and the people that might be ready to downsize and would be happy in a smaller home are somewhat ‘stuck’.
“We end up with young couples starting families in apartments and units, and the people who want the walkable community and who are getting by on one car, and who like the lock up and leave idea are in these larger homes and properties that require maintenance,” Mr McCrindle said.
Affordable, medium-density housing is also important for attracting workers and being able to address the skills shortage according to Mr Kuestenmacher.
“If there is affordable housing, you will get the workers moving there. That is essentially the deal,” Mr Kuestenmacher said. “I call it the first mover’s advantage.”
“For example, if Darwin just happened to be the first city that provides at scale, really affordable, low-income housing, they will get the workers and then they will continue to grow beyond their wildest dreams.
“But everyone has this same problem and everywhere I see the same general reluctance to be trying something different.”
Mr Kuestenmacher also notes the separation of migration policy and housing policy as an issue for forward planning.
“In the last Federal Budget, Treasury stated 235,000 new migrants are coming to Australia,” Mr Kuestenmacher said. “In net terms, that is great and that would go a long way to fixing the skills shortage.
“International students might turbocharge the economy by running foreign money into our system. That’s great.
“But this number in the Budget is 60,000 people higher than before, and it is not linked to any housing policy. Housing and migration are separated from each other and that is just ridiculous.
“If we are going to have 60,000 new people here, then we will need at least 25,000 new dwellings.”
Mr Kuestenmacher says the need to continually increase our population and drive economic growth paired with the pressure that it puts on housing supply, is an issue that will challenge Australia for the foreseeable future.
Looking ahead, Mr McCrindle also notes that Generation Y will be the ‘sandwich’ generation.
“Over the next decade, they (Gen Y) will be looking for housing and care solutions for their parents who will be in retirement and hitting old age, while still managing their own children who will likely be at home,” Mr McCrindle said.
“These Millennials or Gen Y will be the sandwich generation between looking after their older parents and still on the hook for their own children.
“Now is the time to start thinking about some nationwide solutions for these issues.”
To be part of the conversation around ‘the future of us’ and how demographics and population trends will impact on our housing needs, join us at UDIA National Congress in March 2023 where Mark McCrindle will be a guest presenter.
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The UDIA’s National Congress will be held between 27 and 29 March this year, with more details available on the UDIA National Congress website.
This story was originally published in The Urbanist magazine, an official publication of the Urban Development Institute of Australia (WA). It has been edited for republication by The Property Tribune.
The Property Tribune thanks the UDIA WA for the opportunity to republish the work, and share thought leadership in relation to urban development and community creation with our readers.
Read the original copy of The Urbanist by heading to UDIA WA’s website under the News tab.
