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April 22, 2024

An essential and resilient sector: why healthcare property

Colin Mackay, Research and Investment Strategy Manager, Cromwell Property Group


The healthcare and social assistance sector is an essential and growing industry, accounting for 8% of the Australian economy1 and 16% of employment2. It is expected to see the biggest increase in government funding from 2022-23 to 2062-63, with government health spending per capita forecast to grow by 2.0% p.a. on an inflation-adjusted basis3. In this short article, we’ll provide a brief overview of healthcare’s key growth drivers, and why healthcare property presents a compelling investment opportunity for income-oriented investors seeking stability and diversification.

Demographic tailwinds

Growth in Australian healthcare is underpinned by several long-term demographic trends, which are spurring demand for care services. Firstly, Australia is forecast to experience the strongest population growth across developed economies over the next decade4. On top of broad-based population growth, there is an even more pronounced “population bulge” now sitting in the 65+ age bracket due to the post-war baby boom. Life expectancy is also rising, up from 78 years (men) and 83 years (women) two decades ago to 81 and 85 today, with the rising trend expected to continue3. These factors mean the number of people aged 65+ will more than double and the number aged 85+ will more than triple over the next 40 years. As we live longer, the proportion of our lives lived in “full” health is slowly declining, meaning a longer period of time where health services and care are needed per person.

People aged 65+ currently account for 40% of government health spending despite being only 16% of the population.

Rising disease incidence

Naturally, an ageing population also means rising disease incidence and complexity. People aged 65+ currently account for 40% of government health spending despite being only 16% of the population3, with 95% of those aged 65+ having two or more chronic health conditions, compared to 59% of those aged 15-444. This is being exacerbated by lifestyle factors, such as poor diets and lack of exercise, and improved medical detection and diagnostics, which are seeing the rates of disease incidence also increase on an age-standardised basis5.


Non-cyclical demand

Healthcare is a defensive, necessity service resilient to fluctuations in the economic cycle. Since gross value added data by industry has become available, healthcare has only contracted in 37 of 197 quarters, making it the second most consistently expanding industry behind Education, which has contracted in 25 quarters1. By comparison, cyclical industries such as mining and construction have contracted in 69 and 71 quarters respectively.

Volatility in healthcare demand is lower than in other industries, and growth has also typically occurred even during periods of recession or global economic disruption (e.g. the GFC). In fact, annual growth in gross value added has never been negative for more than one consecutive quarter, with the worst result (-5.0%) recorded during the COVID-19 pandemic when most health services were shutdown. Even during the pandemic, the sector experienced a sharper recovery than the broader economy.

Strong fundamentals

The healthcare sector in Australia is an essential and growing industry. Underlying demand is being driven by long-term demographic trends such as population growth, the ageing population, and longer life expectancy. Rising disease incidence and complexity add further to the growing need for healthcare services and facilities. Demand is non-cyclical and resilient to economic fluctuations, making healthcare property assets a compelling investment for income-oriented investors seeking stability and diversification.


  1. National Accounts, ABS (Dec-23)
  2. Labour Force, ABS (Feb-24)
  3. Intergenerational Report 2023, Commonwealth of Australia (Aug-23)
  4. 10-year average growth from 2024-33 based on UN median population projections for ‘More Developed Regions’ excluding Holy See
  5. National Health Survey 2022, ABS (Dec-23)

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