Two waves, one workforce: the demographic squeeze facing aged care

Australia’s aged care sector is heading into what can only be described as a demographic vice.

New analysis from Informed Decisions shows the country has already entered the first wave of accelerated population ageing, with a second, more intense surge in the 80+ population looming from the late 2020s.

The headline numbers are sobering.

Over the next two decades, around 2.5 million additional Australians are forecast to join the 65+ population. From the late 2020s onwards, growth accelerates in the oldest age groups, with around 1.3 million more people projected to enter the 80+ cohort by the mid-2040s.

That second wave matters most. It is the age group where health needs rise sharply and where formal care demand intensifies.

And it is arriving just as the workforce that delivers care is itself ageing.

Growth is not evenly spread

While population ageing is national, the pressure will not be.

The report shows growth concentrated in Australia’s four largest states, with significant increases in both the 65–79 and 80+ age groups between 2025 and 2045.

According to the forecast chart (ABS National Forecasting Program data, analysed by Informed Decisions):

• NSW is projected to see an increase of 790,000 people aged 65–79 and 465,000 aged 80+
• Victoria: 771,000 aged 65–79 and 392,000 aged 80+
• Queensland: 585,000 aged 65–79 and 326,000 aged 80+
• Western Australia: 359,000 aged 65–79 and 189,000 aged 80+

Even smaller jurisdictions such as South Australia and Tasmania see notable increases relative to population size.

Informed Decisions Chief Economist Rob Hall says the implications for planning are profound.

“Australia’s aged care system is entering a period of significant change. Population ageing is accelerating; the regulatory environment is being reshaped under the new Aged Care Act, and the workforce underpinning care delivery is under sustained pressure”.

For providers already adjusting to new regulatory settings, funding reforms and heightened compliance expectations, demographic acceleration adds another layer of structural change.

Today’s growth corridors are tomorrow’s care hotspots

The analysis identifies specific suburbs expected to see the largest increases in residents aged 65+ between 2021 and 2046. Surfers Paradise, Sunbury, Maroochydore, Morayfield, Baldivis and Castle Hill all feature among the top projected growth areas.

These are not traditional “retirement” enclaves alone. Many are family-dominated outer suburbs that will become significantly more age-diverse over the next two decades.

Australia’s median age has already risen from 37.2 years in 2016 to 38.4 years in 2021 and is projected to reach around 41 by 2045. What has been a gradual demographic shift is now accelerating.

For operators, this raises strategic questions around land acquisition, service mix, home care expansion and workforce distribution. Demand will grow, but not uniformly.

Demand rising fastest where workforce is weakest

The more uncomfortable finding sits on the supply side.

Australia’s care economy draws from a single, overlapping labour pool. Around 460,000 workers operate across aged care, disability, home care and related services. They are not separate silos. They are competing employers drawing from the same people.

At the same time, 23% of Australia’s health care and social assistance workforce is aged 55 or over.

Hall is blunt about what this means.

“If an organisation cannot secure enough staff, they simply can’t keep a facility running, regardless of how strong the demand may be in the area. The challenge is compounded by an ageing workforce, with many workers approaching retirement and expected to exit the sector within the coming decade. The aged care sector must prepare for rising demand at the same time it replaces around 23% of its workforce due to retirements”.

Some regions face even sharper exposure. In parts of Western Australia’s Wheat Belt and South Australia’s Barossa–Yorke–Mid North, more than a third of health care workers are nearing retirement.

In other words, demand is accelerating fastest in areas least able to absorb workforce losses.

Housing is tightening the vice

Housing affordability is compounding the problem.

In high-demand metropolitan regions, median house prices can be 30 to 40 times the annual income of a health care worker. In Sydney’s Eastern Suburbs, the house price to income ratio for health care workers sits at around 40.

This pushes key workers further from employment hubs, increases commute times, drives turnover and deepens reliance on agency staffing. In regional communities where ageing is most concentrated, workers are often priced out entirely.

The result is not only staffing gaps but continuity risks for residents.

A structural challenge, not a cyclical one

The significance of this report lies in what it makes clear: this is not a short-term surge. It is a structural demographic transition layered over regulatory reform and workforce fragility.

As Hall notes:

“With demand rising fastest in areas least able to absorb workforce shortages, coordinated action across governments, providers and communities will be essential. Informed Decisions’ new analysis highlights not only where population ageing is accelerating, but where investment, planning and workforce solutions must be prioritised to ensure older Australians receive the care and support they deserve in the decades ahead”.

For aged care leaders, this is a strategic planning moment.

Site feasibility can no longer be assessed on demand alone. Workforce modelling, housing affordability, migration patterns and age structure must sit alongside occupancy projections.

The question for providers is not whether demand will grow. It is whether the sector can staff it.