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461 | Why AI, Office Culture and Medium Density has the Power to Revolutionise Australia’s Property Market! - Chat with Simon Kuestenmacher

The Property Couch

Wed Sep 20 2023



Interest Rates and Demographics:

  • The Reserve Bank of Australia (RBA) has three mandates: stability of the currency, full employment, and the general well-being of the population.
  • The RBA is currently facing challenges in managing inflation and unemployment due to demographic factors.
  • The RBA's traditional approach of increasing interest rates to control inflation may not be effective in the current demographic environment.
  • The aging population and wealth distribution among baby boomers contribute to a different spending pattern that does not align with traditional monetary policies.
  • Increasing interest rates could lead to unintended consequences such as slowing down spending by younger generations who have less cash savings.

Population Growth and Housing:

  • Australia's superpower is its ability to attract migration due to its appealing living conditions.
  • The pandemic caused a temporary decline in migration, but there was pent-up demand for people wanting to come to Australia.
  • Over the next 65 years, Australia is projected to double its population, which will require strategic planning for housing and infrastructure development.
  • Medium-density housing can be a solution for accommodating population growth while maintaining affordability and livability.
  • Developing smaller cities at a faster rate than large cities can help distribute population growth more evenly along the coast.

Skills Shortage and Automation:

  • The skills shortage in Australia is severe due to the retirement of baby boomers without an equally sized or larger cohort entering the workforce.
  • AI technologies can help automate repetitive tasks, freeing up time for workers to focus on interpersonal and collaborative work.
  • Businesses should embrace AI as it humanizes work by enabling more communication and collaboration among employees.
  • AI can also drive innovation under pressure, leading businesses to invest in technology and increase worker productivity.

Hybrid Work Environment:

  • Remote working during the pandemic has shifted preferences towards hybrid work environments where employees split their tasks between home and office settings.
  • Interpersonal tasks that require team collaboration are better suited for office interactions, while quiet thinking tasks can be done remotely.
  • The hybrid work model allows for flexibility while maintaining team culture and learning opportunities in the office.
  • AI technologies can create more interpersonal tasks, further emphasizing the need for employees to come to the office periodically.
  • Office towers may fill up gradually as workers adapt to the hybrid work environment, combined with population growth.

AI and Technology:

  • AI is not something to fear, as it will bring about technological advancements and opportunities.
  • Technology will be prevalent in various aspects of society, including the property market.
  • The new generation of workers are less reliant on office spaces, thanks to technology.
  • While AI can automate certain tasks, there is still a need for human workers in areas like aged care.

Intergenerational Wealth Transfer:

  • There will be a significant intergenerational wealth transfer in the next two decades.
  • Baby boomers retiring and passing on their wealth will contribute to this transfer.
  • The estimated amount of wealth transfer is $3.5 trillion over the next 20 years.
  • This transfer of wealth will have an impact on property demand and investment opportunities.

Office Culture:

  • Some argue that office culture fosters team spirit and collaboration.
  • Research suggests that being physically present together as a team one day per week is enough to create a strong team culture.
  • Learning and knowledge transfer may require more than one day in the office due to reduced interactions when working remotely.

Future Trends:

  • Australia's population is expected to double by 2065, leading to increased economic activity and growth.
  • The mining industry will play a crucial role in Australia's future, particularly with the global push for greener technologies.
  • Intergenerational wealth transfer will lead to densification of middle suburbs through townhouse developments.
  • Younger generations may move to outer suburbs or regions before eventually upgrading into city outskirts.

Property Investment Opportunities:

  • The intergenerational wealth transfer presents opportunities for property investors, as recipients may invest in real estate with their inherited funds.
  • Land values and productive use of land will increase due to higher demand from population growth and changing demographics.

Importance of Long-Term Thinking:

  • It's important to think long-term when considering property investments and understand how demographic trends shape markets over time.
  • Embracing change and understanding the dynamics of evolving suburbs is crucial.
  • The 2030s and 2040s will be transformative decades for Australia, with significant movement in population, housing, and wealth.

Impact of Intergenerational Wealth Transfer:

  • The transfer of wealth will have a positive impact on property prices as recipients use inherited funds to enter the market.
  • Property investors can benefit from this increased spending capacity and changing demographics.
  • Understanding the potential effects of intergenerational wealth transfer allows investors to make informed decisions about their portfolios.