Could AI – Artificial intelligence cause the next Australian property bust?
A prediction is that AI and machine learning automation is going to wipe out a huge number of jobs in the Australian economy, because so many Australian jobs are in rules-based knowledge processing, and AI and Machine Learning just do rules-based knowledge processing better, quicker and cheaper than we humans.
Walk around the floors of any office tower in any Australian city looking for clusters of more than 8–10 people with the same job title in the same department. Why? Most of the office towers in Australia are occupied by service firm of some kind and in these companies, any group of people larger than an executive team (hence 8–10) and doing the same thing (hence same job title and department) are engaged in rules-based information processing.
Approving mortgage applications, checking insurance forms, evaluating tenders, setting up new mobile phone accounts, booking flights and hotel rooms, qualifying sales prospects, or looking for greater efficiency or checking the legal compliance or collecting the monthly reports from those same processes…
All of those processes can be done faster, better and cheaper by software automation.
Every month another business news story increases an analyst’s estimate of how many jobs in law, accounting, banking, insurance, telecommunications, travel, retail, marketing, and sales will be replaced by software automation. Today, Macquarie Private wealth says it could replace one in four jobs in Australian banking.
So maybe, you work in tech startups and not for an Australian bank, and you don’t need to worry (yet) about software automation replacing you.
But maybe, you do work in a rules-based information processing role. You’re not alone.
Consider all those families within a 30 km radius of the city centers of Sydney, Melbourne, Brisbane or Perth whom have bought residential housing with a mortgage funded by two people, both employed in a rules-based information processing role for a bank.
What about those working for a telco company, insurers, airlines, mining companies, professional services firms, such as accounting, legal and consulting?
If both of those people have a one in four chance of losing their job and aren’t able to find the same kind of work elsewhere due to automation, how many have to default on their mortgage?
What percentage of those mortgages can be serviced by only one of those two salaries if the household is fortunate enough to lose only one salary to automation?
What does that do to house and apartment prices?
Maybe its time to consider forward planning?
Should you be left with a mortgage debt worth more than your property within 5-10 years times.
When is it time to downsize?
When is it time to retire?
Is it time to consider the bigger picture?
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