Bernard Salt, is a leading authority on population demographics and some one whom I have a lot of time for. In a recent article he stated that he believes the recent change in policy to reduce the immigration levels in Australia will ultimately result in a reduction in the overall demand for housing in Australia. Ultimately this will result in a slowing of activity in property prices.

He believes that the decline in population growth over the next 2 to 3 years will be largely felt by 2015 when the bulk of the baby boomers will be receiving aged pensions and other tax funded benefits and their tax contributions will cease.

All things being equal, the tax revenue

On the other end the X and Y generation will be required to contribute more in the way of tax contributions to make up the short fall. This will reduce their disposable income and affordability of houses. In conjunction with the fall in population growth and the down sizing of baby boomers then it is inevitable that the property prices will be affected. (This of course assumes that the level of new properties being constructed will not fall substantially.)

So, the result is that Berny sees property prices cruising steadily over the next 2 to 3 years then languishing until 2015 before the federal government comes to its sensors and realizes that population growth is needed to increase the tax base (hence increase immigration) which will result in increased pressure on housing and improved price growth.

In my opinion, at the end of the day when all is said and done, we’ve been through all types of economic turmoil and world disasters over the decades but property always managers to recover and perform well in the long run. So if you stick to the basic principals of doing your homework and selecting the right property in the right suburb in the right location then you’ll be able to weather whatever storms may lie over the horizon.