How brokers can navigate Australia's ageing population

What will the next 40 years of broking look like?

How brokers can navigate Australia's ageing population


By Ryan Johnson

Australia’s population will become older and more dependent prompting a significant shift in demand towards certain types of housing and commercial finance products, according to Sydney broker Zac Constantinou.

Australia’s 2023 Intergenerational Report released in August showed Australians are currently living longer with more years in full health and more time using government-funded services – and this trend is likely to continue over the next 40 years.

By 2063, the population is forecast to increase from 26.5 million to 40.5 million, which means there will be significantly greater demand for housing.

Given the number of people aged over 65 is set to double and over 85s are set to triple, Zac Constantinou (pictured above) of Shore Financial said brokers would play a crucial role in understanding and adapting to these shifting housing dynamics.

“There will likely be an increased demand for retirement communities, assisted living facilities, and housing options that cater to the specific needs of older adults,” Constantinou said. “Brokers will need to stay well-versed in the intricacies of age-specific mortgage products, including reverse mortgages that allow older adults to access home equity for retirement income.”

“Moreover, brokers can guide clients through financial decisions related to downsizing, tapping into home equity, or transitioning to more age-friendly living spaces.”

Catering to a more dependent population

The average person's real income after inflation will increase by about 50% over the next 40 years, taking the average annual salary to around $143,000 in today's money.

However, workers are going to need it with more people in the economy dependent on others.

The 2023 Intergenerational Report found the old-age dependency ratio (the ratio of older dependents to the working-age population) is likely to increase as the population ages.

Right now, for every 100 workers there are 26.6 dependents; by 2063, those same 100 workers will need to support 38.2 dependents.

Constantinou said this changing dynamic could also impact the renovation and modification of existing homes to be more age friendly and accessible.

“Additionally, multigenerational housing might become more prevalent as families seek to accommodate ageing parents while maintaining close connections,” he said.

“Financial services that provide advice on downsizing, estate planning, and managing retirement funds will also be in high demand. Lenders might develop specialised products for older borrowers, considering factors like retirement income and longer loan terms.”

Technology and digital transformation

The Intergenerational Report also emphasised the importance of technology and, in particular, the ongoing digital transformation will have on improving quality of life and incomes over the next 40 years.

“As the financial world becomes more tech-heavy, brokers should stay ahead by embracing digital platforms for document submission, communication, and even virtual consultations. Navigating the intricacies of superannuation, as projected in the report, will be another vital skill for brokers to possess,” he said.

“By understanding the complexities of SMSF loans and investment strategies, brokers can offer comprehensive solutions that cater to the unique needs of clients, aligning with the progressive trends.”

How will these long-term trends impact commercial finance?

The ageing population is likely to impact the commercial market in various ways, with the potential of increased demand for healthcare facilities, including medical offices and assisted living centres.

Retail and entertainment sectors might need to adapt to cater to the preferences and needs of older consumers.

Additionally, there might be a rise in demand for mixed-use developments that offer convenience and accessibility, combining residential, commercial, and community spaces to create age-friendly environments.

Constantinou, who also specialises in commercial finance, said these trends presented an opportunity for mortgage brokers to diversify their expertise.

“Brokers can expand their knowledge beyond traditional residential mortgages to include commercial real estate financing. Navigating the complexities of financing for medical facilities, assisted living centres, and mixed-use developments will be key in assisting clients in the evolving commercial market,” he said.

“As technology continues to shape the industry, brokers can harness data analytics to provide insights into investment opportunities aligned with demographic shifts, helping clients make informed commercial real estate decisions.”

Planning ahead

While the future is dependent on the present, Constantinou said long-term trend reports such as the Intergenerational Report offer valuable insights into the future needs of the population.

“Brokers can leverage the insights to anticipate shifts in housing demand and financial preferences,” he said. “Planning ahead based on these trends will position brokers to provide valuable guidance and support to their clients.”

What do you think the state of the broking industry will look like in 2063? Comment below.

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