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Demographics determine house price headwinds...
Topic Started: 17 Sep 2015, 12:14 PM (2,474 Views)
ThePauk
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One of the strongest engines of economic growth started slowing 10 years ago -- and it's not coming back

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"Economics professor Charles Goodhart and his team at Morgan Stanley just published a note on global demographics, with some fantastic charts that show just how much the shape of the world’s population is changing, and how it will affect us.

During the second half of the 20th century, there was an explosion in the size of the global workforce, with countries like China opening up to international markets. Demographics were on-side, with the working-age population growing at strength around the world. That was a pretty easy and natural source of growth for decades.

Now, that’s not looking so great any more. It’s not a new development — in fact, the growth peaked at over 70 million new workers per annum in 2005, and is heading down:

By the 2030s, at the end of the chart, population growth will have slowed in absolute numbers to the lowest increases since the 1960s, rising by less than half than what it did in 2005. Workforces in developed markets and China will shrink, and African growth will provide the lion’s share of the world total."...

http://www.businessinsider.com.au/the-worlds-working-population-growth-started-slowing-10-years-ago-2015-9


A low growth, lower return world: get used to it
Volatility is here to stay, whether the US Federal Reserve lifts interest rates or not, and investors should prepare for lower growth and abandon the 'set and forget' axiom.
Tracey McNaughton , head of investment strategy at UBS Global Asset Management Australia/NZ, says it's time to prepare for a new, low-growth world and to expect lower returns. The other option is to work harder to get the higher returns to which investors had become accustomed.
A decline in real interest rates driven by an aging population, near-zero interest rates as well as stricter regulation are all driving lower growth, she said. "
Read more: http://www.smh.com.au/business/markets/a-low-growth-lower-return-world-get-used-to-it-20150916-gjnz5c.html#ixzz3lxEfbUxZ

Edited by ThePauk, 17 Sep 2015, 12:19 PM.
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peter fraser
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ThePauk
17 Sep 2015, 12:14 PM
One of the strongest engines of economic growth started slowing 10 years ago -- and it's not coming back

Posted Image

"Economics professor Charles Goodhart and his team at Morgan Stanley just published a note on global demographics, with some fantastic charts that show just how much the shape of the world’s population is changing, and how it will affect us.

During the second half of the 20th century, there was an explosion in the size of the global workforce, with countries like China opening up to international markets. Demographics were on-side, with the working-age population growing at strength around the world. That was a pretty easy and natural source of growth for decades.

Now, that’s not looking so great any more. It’s not a new development — in fact, the growth peaked at over 70 million new workers per annum in 2005, and is heading down:

By the 2030s, at the end of the chart, population growth will have slowed in absolute numbers to the lowest increases since the 1960s, rising by less than half than what it did in 2005. Workforces in developed markets and China will shrink, and African growth will provide the lion’s share of the world total."...

http://www.businessinsider.com.au/the-worlds-working-population-growth-started-slowing-10-years-ago-2015-9


A low growth, lower return world: get used to it
Volatility is here to stay, whether the US Federal Reserve lifts interest rates or not, and investors should prepare for lower growth and abandon the 'set and forget' axiom.
Tracey McNaughton , head of investment strategy at UBS Global Asset Management Australia/NZ, says it's time to prepare for a new, low-growth world and to expect lower returns. The other option is to work harder to get the higher returns to which investors had become accustomed.
A decline in real interest rates driven by an aging population, near-zero interest rates as well as stricter regulation are all driving lower growth, she said. "
Read more: http://www.smh.com.au/business/markets/a-low-growth-lower-return-world-get-used-to-it-20150916-gjnz5c.html#ixzz3lxEfbUxZ

How many immigrants from Africa do you think Australia will take when they become overcrowded?
Any expressed market opinion is my own and is not to be taken as financial advice
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ThePauk
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peter fraser
17 Sep 2015, 12:30 PM
How many immigrants from Africa do you think Australia will take when they become overcrowded?
Very few....

As Australia ages, it become more anti-immigration as the major voting blocs age.

We are at 184,000 now, well below all three assumptions from the ABS population projections.

Australia will also need to compete more for immigrants and our high cost of living is a negative to many who want to come here.

Adding immigrants does not solve the fiscal ageing challenges as all immigrants also age and 80% will require the full or part pension. 4.1 million boomers born here and now we have 5.4 million due to immigration. 80% of that extra 1.3 million, will require full or part pension with the majority needing a full pension. All immigration does is kick the can down the road, as the PC outlined.
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peter fraser
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ThePauk
17 Sep 2015, 12:35 PM
Very few....

How do you know what will happen in the future?
Any expressed market opinion is my own and is not to be taken as financial advice
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ThePauk
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peter fraser
17 Sep 2015, 12:54 PM
How do you know what will happen in the future?
Demographics are quite easy to predict for the future.

For example, fewer babies over the last two years means less mothers down the track. Simple...

Those that are alive today, will die, so projected deaths are also quite accurate.

All part of the science that is sociology.
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peter fraser
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ThePauk
17 Sep 2015, 01:41 PM
Demographics are quite easy to predict for the future.

For example, fewer babies over the last two years means less mothers down the track. Simple...

Those that are alive today, will die, so projected deaths are also quite accurate.

All part of the science that is sociology.
yes but like everybody else you have no idea of what the immigration numbers are going to be in the future.
Any expressed market opinion is my own and is not to be taken as financial advice
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Veritas
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peter fraser
17 Sep 2015, 01:58 PM
yes but like everybody else you have no idea of what the immigration numbers are going to be in the future.
Doesn't stop the VIs talking about housing shortages based on population growth.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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ThePauk
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peter fraser
17 Sep 2015, 01:58 PM
yes but like everybody else you have no idea of what the immigration numbers are going to be in the future.
True, to an extent. I do know what they are now, as 184,000 and I do know what the caps are into the future.
I also know that our natural growth is about to fall off a cliff as 80 years after a baby boom comes a death bust, so I do know that our population growth moving forward is much smaller than it has been in the past.
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Will
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ThePauk
17 Sep 2015, 12:35 PM
Very few....

As Australia ages, it become more anti-immigration as the major voting blocs age.

We are at 184,000 now, well below all three assumptions from the ABS population projections.

Australia will also need to compete more for immigrants and our high cost of living is a negative to many who want to come here.

Adding immigrants does not solve the fiscal ageing challenges as all immigrants also age and 80% will require the full or part pension. 4.1 million boomers born here and now we have 5.4 million due to immigration. 80% of that extra 1.3 million, will require full or part pension with the majority needing a full pension. All immigration does is kick the can down the road, as the PC outlined.
I'm not racist by any means, but I'm confident that Africans will out breed the carrying capacity of their continent by a long way. The international community doesn't seem to like people dying, so I suspect the overflow will go somewhere. I reckon we will be forced to take up some of that overflow.
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peter fraser
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Veritas
17 Sep 2015, 03:31 PM
Doesn't stop the VIs talking about housing shortages based on population growth.
Global population growth rates may not be in lock step with Australia's growth rates.
We have long been importers of people and I can't see that changing, but who knows.

The population of Africa is set to explode this century, and many of them will want to move to new countries seeking greater opportunities.
Any expressed market opinion is my own and is not to be taken as financial advice
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