Interesting reading in this month's API mag (July) by Bernard Salt, KPMG demographer. In a nutshell, his view is that after 2020 it will be a bleak time for Australian investors, as baby boomers die off. His belief is that it's best to make your money over the next 15 yrs but ensure you get to higher ground before the sluggishness of the 2020's. He also adds that one of the leading indicators of a recovery in the property market is increasing interstate migration, which is already happening in NSW. Underlying demographic trends such as this serve to push in the direction of the next boom, which he forecasts for the end of this decade. Bernard Salt has always had unique views on forecasts, and this article is definitely worth a read.
Even if he's wrong on his dire 2020 warning, I aim on being financially independent before then. I remember reading, and posting, previously about his "One last hurrah for property" prediction. He's consistently said for a while now that there's one last big boom left in Aussie residential IPs before demographics change the scene completely and for a long drawn out period. But he also rightly points out that "you only need one boom". He's right, and I'm already leveraged heavily enough into residential property to retire if it doubles before 2020. Cheers, Michael.
In 14 years time, I believe there will be enough people through migration, immigration and just through todays kids coming of age to keep the investment cogs turning. Just my thoughts though.
Excellent news. Should make enough money in the next boom to set aside and wait for our cheap beachside property as the boomers move from seachange into God's waiting room. When should I shift to investing in retirement villages I wonder? Maybe a Harley-Davidson shop (aka Y-Gen inheritance promoters), lawn bowls, electric blenders or maybe a soup franchise? I like information from demographers and similar statisticians, at least you know they're not trying to sell you property for their own benfits. Question is, how to make the most of it? I'm still thinking one more big shift to the coast / trees / tees around 2009 - 2011 when the bulge in the population pyramid (according to ABS) hits 65. Dave
If you believe his prediction though would you change your long term strategy? I'm not suggesting this is your strategy Michael, but what if the plan was to LOE based on growth in your property portfolio? What if come 2020 the "average" 10% p.a. growth disappears? Quickly move all your equity into shares/MFs? In reality a LOE strategy would probably have a mix of shares and property anyway, but the mix would have to be different if growth in property dropped off. John.
I think Europe is hitting this now, with an older population and less natural population growth. It would be nice to see statistics as to whether property values are still increasing. For what it's worth, I can't see Austalias population ever going below 20 million again. I think if anything we'll be hitting 30 million over the next 50 years. There are too many places in the world with overpopulation to think we can have this massive piece of land with a population of, say, 15 million. It's just common sense.
Its worse than this. If there is no growth then basically the investment is going backwards as one of the reasons there is no growth is that demand for housing has disappeared. With no demand for housing the logical extension is that there will be a fall in the price of housing over a time not just a fall because of inflation but a real fall as nobody wants the product. Cheers PS there are other predictions/views. Harry S Dent 'The Next Great Boom' and of cause our very own PS through he's updates and the post on SS ' 2011 to 2013 - the coming world depression ' Both use slightly different dates to Bernard's
