How Australia’s jobs are setting the property landscape
Dramatic changes to the composition of the workforce are not only influencing key metrics such as economic growth and productivity, but also shaping the demand for housing at a time when the property industry is struggling to meet what is required.
There are multiple forces at play, including wages and overall macroeconomic stability, which spill well beyond housing and into commercial real estate needs, urban development, and property values. Recognising these complex connections will allow for more informed decision-making and strategic planning in both the economic and property sectors.
The most recent ABS Labour Force survey quarterly data, covering the February quarter, shows the shifts in the workforce by occupation, industry of employment, location of employment, and family and household arrangements.
One trend that stands out is that in areas with high concentrations of tech jobs, there is increasing demand for high-end housing, while industrial jobs are driving demand for affordable housing.
The demand for commercial real estate, such as office space and retail outlets, is also influenced by the prevalent occupations in each area, with growing industries driving demand for select properties.
In the year to February, the total number of jobs grew from 13.9 million to 14.3 million.
The survey recorded a total of 473 occupations and of those, 49 per cent of the occupations increased their workforce while 51 per cent remained unchanged or declined in number.
The occupation that recorded the highest growth in net terms was purchasing and supply logistics clerks at about 43,400. With the rise of online shopping, there is more demand for these products to be stored, managed and distributed, creating more opportunities for warehouse workers than ever before.
Health and care-related jobs were also on the up. Notably, aged and care workers saw a substantial increase of 42,100 positions, while nurses experienced a notable rise of 33,700 roles. Nursing support and personal care workers also saw a jump of 29,500 positions.
The rise can be attributed to factors such as an ageing population, rising demand for healthcare services, and government initiatives to improve aged care, and stricter regulation of healthcare.
Social assistance workers such as education aides and welfare support workers also made it to the top 10. Factors driving this demand include population growth and rising awareness of mental health issues, and the need for additional support in schools, welfare agencies, and healthcare facilities. Government funding and initiatives aimed at improving access to education and social welfare services contributed to the growth of these occupations.
Accounting clerks, bookkeepers, storepersons and checkout operators and office cashiers also made it to the top 10 occupations list during the same period. These occupations all support essential business functions and their rise reflects ongoing economic activity, business expansion, and the need for efficient operations.
Businesses that had to let workers go at the height of the lockdowns are now building up their workforce again.
At the other end, in the top 10 declining occupations, fast food cooks dropped by 14,800 – potentially due to better technology and automation which has streamlined kitchen operations.
Following closely were financial brokers, down by 14,500, due to more use of online trading platforms and financial technology.
Human resource managers and clerks were also on the slide, losing 13,600 and 12,700 workers respectively.
One common theme among these jobs is that they are often susceptible to automation through technologies such as robotic process automation, artificial intelligence, and advanced machinery.
One way to stay safe in a job that could be easily automated is to focus on developing skills that are hard for machines to replicate, like problem-solving and communication. Diversifying skill sets and specialising in complex tasks will be key to thriving in these positions.
Despite the significant demand for construction-related services, building and plumbing labourers and concreters are experiencing declines, with reductions of 13,300 and 12,200 jobs respectively.
Tighter lending standards for Australian home loans have led to a significant decrease in building approvals, indicating an imminent slowdown in residential construction activity. This backdrop could be contributing to the decline of construction workers.
In Australia, every occupation receives a skill level ranking from 1 to 5, reflecting the qualifications and experience needed for the role. Skill level 1 denotes occupations requiring at least a bachelor’s degree, such as doctors, lawyers, accountants, and teachers. Skill level 3 encompasses trades-based occupations, while skill level 5 includes labour-based roles such as cleaners and cafe workers, which typically require no formal training or qualifications for job performance.
While knowledge-based jobs have seen growth over the past three decades, in the year leading up to February, lower-skilled roles, such as clerks and service workers, experienced the highest increase in numbers. These occupations rose by 8 per cent (261,000), with seven out of the top 10 growing roles falling into this category, emphasising the demand for care and social workers.
At the same time, skill level 2 jobs saw an increase of 66,000 (4 per cent), and skill level 1 jobs rose by 145,700 (3 per cent). Conversely, trades (skill level 3) and unskilled labour-based roles (skill level 5) declined by 19,600 and 16,200 respectively, each decreasing by 1 per cent.
Economic shifts and industry transformations influence the increase in lower-skilled jobs such as clerks and service workers, possibly driven by the growth of the service sector. Additionally, the ageing population creates a higher demand for care and social workers, reflected in the rise of skill level 4 occupations.
According to the 2021 ABS Census data, skill level 4 employees have a median income of $64,050 per annum, while skill level 1 workers earn $103,000 per annum. With stagnant wage growth over the past four years, these figures likely remain unchanged.
The increase in lower-skilled workers directly contributes to a higher proportion of individuals earning lower incomes.
This all means that it is safe to conclude that affordability will be the primary area of focus for most residential properties. This includes rental properties with lower monthly payments or affordable purchase options such as entry-level homes or apartments. Affordable housing options in well-connected neighbourhoods with access to amenities and services are essential for meeting the property needs of this cohort.
When servicing a population with lower incomes to improve homeownership rates, lenders must consider several factors. Firstly, they should offer flexible lending options tailored to the financial circumstances of lower-income borrowers, such as lower down payment requirements, longer repayment terms, or specialised mortgage products designed for first-time buyers.
Secondly, lenders should prioritise affordability assessments to ensure that borrowers can comfortably afford their mortgage payments without undue financial strain. This may involve considering alternative income sources or non-traditional credit histories. Additionally, lenders can collaborate with government programs, community organisations, and non-profit housing agencies to provide financial assistance, down payment grants, or homeownership counselling to help lower-income individuals overcome barriers to homeownership. Given the trends observed in jobs data and the continuous population growth, investing in transport and warehousing services seems prudent in terms of commercial properties. As the population expands, there is a growing demand for efficient transportation and logistics infrastructure to support the movement of goods and services.
Investing in transport hubs, distribution centres, and storage facilities can capitalise on this demand, serving as vital links in the supply chain and facilitating economic growth. With the rise of e-commerce and online retail, there is also increasing need for last-mile delivery services and fulfilment centres, further underscoring the importance of investing in transport and warehousing properties.
By strategically focusing on these property sectors, investors can align with the evolving needs of a growing population and capitalise on opportunities for sustainable development and economic prosperity.
Hari Hara Priya Kannan is data scientist at The Demographics Group