Our Australian story is one of successful immigration and population growth. Arguably the most successful in the world. It’s hard to deny that we have the best address on earth. Everybody wants to live in Australia, and who can blame them? We truly are the lucky country.
In 2000 our population was about 19 million. Today, 18 years later, we are over 25 million. In the blink of an eye we have added 6 million people. Let’s just pause on that for a moment. That is the entire populations of Brisbane, Perth and Adelaide combined, added in just 18 years!
In 12 years, by 2030, we will be at 30 million having added another 5 million people. By 2055 we are conservatively expected to reach 40 million. Now, if you take Sydney’s population today which is about 5 million, that means in 12 years’ time we will have added another entire Sydney to our population and by 2055 we will have added 15 million…in other words another 3 Sydneys!
What is not generally understood about Australia is simply how big our main cities are. You could fit the entire population of Ireland into Sydney and New Zealand’s into Melbourne.
Not only are our main cities abnormally large, but we are one of the most highly concentrated populations in the developed world. 78% of the country lives in NSW, VIC and QLD and 88% of the recent new population wants to live there too.
50% of Australia lives in our 3 largest cities, compared with 16% that live in the 3 largest cities of the UK and 5% in the US. The concentration pressure is immense and intensifying. This pressure is one of the primary reasons for our incredibly successful investment property story. There is much more pressure to come.
Somewhere to live
Our ever-increasing population needs somewhere to live, which brings us to the subject of housing and investment property. There are only two ways to build all this housing for our growing population – either the government must provide it, or the private sector must take on the responsibility. Seeing that the government is not in the business of being a landlord, that leaves the private sector; normal everyday Australians, to do the job.
It is only fair the government provide these everyday Australians with an incentive for investing and taking on some risk. Consequently, Australia has built one of the best tax systems in the world to encourage the private sector to invest in property. We call it ‘negative gearing’, and it works. Despite all the political back and forth on the subject, it’s a national necessity and the engine that builds all the properties required for this growing population.
Investment property is a way for Australian investors to take advantage of this incredible pressure and build wealth for their futures.
Investing in researched, well-located properties and holding them during this coming wave of growth is the primary wealth solution for most Australians. It is the primary solution to The Gap, the shortfall between what they need to retire comfortably, compared to what they will have.
Everyday Australians are looking for a solution and trusted advisers such as mortgage brokers, accountants and planners are perfectly situated to begin conversations with clients about their future especially as it relates to investing in property
You can also download our eBook on the subject The Gap
This piece was first published in Australian Broker May 2018 (Issue 15.09)