Population growth will help propel Australia to become the world's 11th biggest economy within a decade, a report predicts.

Countries that depend on brainpower to drive their economies will generally overtake those dependant on natural resources, with China tipped to replace the US as the world's biggest economy in 2030, the centre says.

And it's particularly Australia's intake of migrants with highly sought-after skills that will help fuel its future growth.

"Investment in urban infrastructure will need to accelerate as population increases."

Some, however, believe we should trim our intake.

The institute said at the time it believed the results were driven by the impact of population growth on people's quality of life and the rapid change in Australia's ethnic and religious make-up.

It also predicts energy prices will fall in the next 25 years amid a substantial rise in the use of renewables for power generation and growth of energy supplies from fracking.

Meanwhile some of Australia's closest neighbours are expected to enjoy booms, with the centre forecasting the economic rise of developing countries.

"By 2030 three of the world's top four economies will be Asian (China, India and Japan)," the centre said.

December 28, 2017
Belinda Tasker
(Australian Associated Press)

Resource stocks are tipped to be among the best performing Australian investments in the new year, while residential property loses favour.

Resource companies were the big winners in 2017 on the back of an upswing in prices for commodities iron ore, coal and petroleum.

Its rival Rio Tinto almost doubled its half-year net profit to $US3.3 billion, and paid shareholders a record interim dividend.

Citi equity strategist Tony Brennan forecasts the local share market will reach 6,400 points by the end of next year, producing a double-digit return with yield, concentrated in the resources sector.

"While there could be more slippage elsewhere, the improving economy yet still low labour cost rises should limit downside risks."

He says Australian investors still have a heavy bias towards residential property but will likely move away from that area in 2018 in response to tougher lending restrictions.

Local investors were also increasingly boosting their international exposure either via direct shares or ETFs and would continue the trend next year, he said.

Assets under management in the Australian ETFs market have more than tripled over the past four years to around $25 billion, according to the Reserve Bank of Australia.

Reserve Bank of Australia governor Philip Lowe on Wednesday labelled bitcoin a "speculative mania," mostly attractive to criminals and speculators, while US financial regulator, the Securities and Exchange Commission, has urged investors to exercise extreme caution.

"The outlook for cryptocurrencies is binary; they are either going to succeed spectacularly or they are going to fail," he said.

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Legislation allowing first-home buyers to save for a deposit through their superannuation has cleared the Senate.

People buying their first home will be able to make pre-tax super contributions of up to $30,000 which can later be withdrawn and used for a home deposit.

The government supported Liberal Democrats senator David Leyonhjelm's amendments which will extend the measure to people who have fallen on financial hardship.

The opposition and the Greens are against the changes, with Labor senator Doug Cameron arguing the first-home buyers scheme will do nothing to address housing affordability.

But government frontbencher Zed Seselja said it is a well-calibrated scheme, giving people a tax break which would help them get an important asset.

The youngest person elected to the upper house, Greens senator Jordon Steele-John, 23, warned if more wasn't done to fix house prices a generation would be lost.

One Nation supported the bill, but leader Pauline Hanson said housing affordability could also be aided by curbing immigration levels.

Simone Ziaziaris
(Australian Associated Press)

The International Monetary Fund says any pickup in Australian economic growth is likely to be "modest" and has dimmed hopes for stronger wage growth.

The IMF's preliminary annual report on the Australian economy says global growth, low local unemployment and new infrastructure projects more than offset declining housing investment.

But any pickup will be modest until the economy has been operating at full employment for some time.

The Washington-based institution praised Australia's continued recovery under the transition from the mining boom despite setbacks, citing strengthened domestic demand and employment growth since the beginning of the year.

"But labor market slack remains present and wage growth has remained weak," the IMF said in a concluding statement on Monday.

It said Australia will need interest rates to remain low in order to achieve full employment.

"Securing the return to full employment and inflation objectives durably will require continued macroeconomic policy support," the IMF said, adding low wage growth has continued to weigh on household consumption.

The local housing market is expected to cool but affordability issues and household debt vulnerabilities are unlikely to be corrected soon, it said.

Driving the cooling down is the expectation that the building completion rate will catch up with demand in major eastern capital regions.

But given continued strong population growth and foreign buyer interest, the IMF expects demand growth for housing to remain robust and said prices should stabilise rather than fall significantly.

IMF mission chief Thomas Helbling told a briefing in Sydney that supply-side policies will be needed for a longer-term balance in the housing market.

"In an economy like Australia where much of the growth is housing, it is also about a balance of supply and providing an affordable space for urban areas to develop," Mr Helbling said.

The IMF also cited Australia's"notable" infrastructure gap compared to other advanced economies and said more government spending on infrastructure particularly roads, ports and public transport will be crucial for future growth.

"While the recent boost has helped to narrow the gap, it might not be enough to close it," the IMF said.

"Further increases in investment have the potential to improve physical and digital interconnectivity, both internally and with Australia's trading partners, thereby contributing to higher growth."