Housing, healthcare, financials to benefit from population boost

Yasmine Raso

Senior Journalist, Financial Newswire

22 July 2025

Housing, healthcare and financial services have been singled out as three key sectors set to benefit from a “structural investment opportunity” driven by Australia’s population growth, according to a boutique long-only fund manager.

New commentary from Datt Capital said the nation’s population has continued to increase due to overseas migration, with net figures standing at 667,000 people in 2024 – well above the government’s projected 200,000 people per year.

With national population forecasts now sitting between 36 million and 45 million by 2056, Emanuel Datt, Chief Investment Officer at Datt Capital, said these figures should be considered as more than just a “statistical anomaly” and instead representative of an impending “demand-led growth phase”.

“We see structural population growth and migration-driven demand as key catalysts for long term investment opportunities, particularly benefiting Australia’s small cap companies,” he said.

“Population growth boosts aggregate demand and acts as a shield against economic contraction, while simultaneously allowing the economy to expand without rapidly encountering labor market constraints.”

According to the Australian Bureau of Statistics (ABS), the total number of dwellings that commenced building increased by 11.7 per cent or 47,645 as of March but still remained well behind demand forecasts and the government’s target of building 1.2 million dwellings in five years. This has led vacancy rates in major cities to fall below one per cent and in turn fuel a significant “undersupply issue”.

A similar trend is building in the healthcare sector with an ageing population fuelling rising patient loads and aged care requirements, while financial services is seeing ‘increased activity in mortgage origination’.

According to Datt, this has drawn several similarities between Australia and Canada, as nations that have both “embraced high immigration as a growth lever”, but also to showcase how Australia is “better positioned to monetise the demographic shift”.

“Despite similar migration rates, Canada is grappling with demographic and housing challenges, while its real GDP per capita is projected to decline,” Datt said.

“Meanwhile, Australia is leveraging its immigration tailwinds more effectively, helping maintain consumer confidence and labor market stability.

“The healthcare industry, in particular, is expected to continue its upward trajectory, with a projected compound annual growth rate (CAGR) of 4.5% from 2021 to 2028, driven by an aging population’s increasing demand for healthcare services and the pressing need for digital infrastructure.

“The industry offers favourable demographics due to Australia’s aging population, a strong focus on research and development (R&D), a robust regulatory framework, public-private partnerships and opportunities in medical tourism.

“Looking forward, the Datt Capital Small Companies Fund is well positioned across thematically aligned businesses in residential development, diagnostics, mortgage servicing and digital financial infrastructure.

“Passive strategies often overlook these sectors, but companies in these sectors offer strong earnings growth and pricing power. For investors willing to target underserved pockets of the economy, the implications are potentially transformative.”