Immigration, Housing, and the ASX Bubble—What It Means
for Your Wealth
Australia is at a crossroads. Unprecedented immigration, housing affordability challenges, and a surging stock market are reshaping the financial landscape. As your financial planner, I want to help you understand how these forces interact—and what they mean for your long-term plans.
Immigration: More Than Just Numbers
Australia’s migration story is evolving. In the 1950s–70s, post-war migration averaged 85,000–100,000 people per year, focused on nation-building. By the 1980s–90s, numbers stabilized at 70,000–120,000, with a shift toward skilled migrants and multiculturalism. Since the 2000s, migration has soared, peaking at over 500,000 annually in recent years.
While immigration is often promoted as a solution to an ageing population and sluggish productivity, the reality is more complex. Evidence shows that while migration can temporarily offset population ageing, it doesn’t provide a permanent fix. As migrants age, the cycle repeats, requiring ever more newcomers to maintain the balance.
Housing Affordability: Policy and Population
The housing crisis isn’t just about more people. Policy decisions have played a major role:
- The 1999 reduction in Capital Gains Tax and the continued use of negative gearing have fuelled investor demand.
- Banking deregulation in the 1980s made borrowing easier, encouraging speculation.
- Home building has not kept pace: Australia now builds only 6 homes per 1,000 people, compared to 10 per 1,000 in 1970.
The result? Soaring prices, tight rental markets, and many Australians locked out of home ownership. In cities like Melbourne, population growth is expected to outstrip water availability by decade’s end.
The Ageing Challenge
Australia’s post-war migration boom is now visible in our demographics. The number of Australians aged 80+ is set to exceed 3.5 million by 2063—more than triple today’s figure. Demand for aged care is rising 3.7% annually, and government spending on aged care will more than double as a share of GDP by 2063.
The ASX: A Bubble in Plain Sight?
While much attention is on AI and tech stocks, Gerard Minack’s recent analysis argues that the real bubble is in the Australian share market (ASX). Here’s why:
- Despite three years of falling corporate profits (ASX200 forecast earnings per share are down 15% since 2022), the ASX index is up 40%.
- The market is trading at near-record valuations, with low single-digit earnings growth forecast—hardly a recipe for sustainable gains.
- The root cause? Fast population growth without matching investment. This leads to crowded infrastructure, housing shortages, and falling productivity.
Minack warns that real wages can’t rise without stoking inflation, and that the disconnect between market valuations and underlying profits makes the ASX a risky bet right now.
What Does This Mean for You?
- Diversification is key: Don’t rely solely on property or shares—spread your risk.
- Stay informed: Policy changes, demographic shifts, and market cycles all impact your financial plan.
- Long-term focus: Short-term bubbles and corrections are part of the landscape. A disciplined, diversified approach is your best defence.
If you’d like to discuss how these trends affect your financial plan, please get in touch.
Sam Martin CFP®
Authorised Representative (No 252676)
