Housing prices (in economically productive regions) are completely decupled from the birth/death driven demographics.
I'm from a country with a demographics falling off the cliff, like Germany but worse, and just like Germany, housing prices (where jobs are) have went nowhere but up at a steep rate beyond wage growth, because housing is not a fixed pie for whom now less people are competing due to increased deaths vs births, because for a few decades now, it's no longer just people competing for housing against the other people, but piles of money competing against other piles of money, and the bigger piles are winning(aka investors).
If you expect housing to get cheaper because less babys will be born, you'll be in a rude awakening. If you want housing to go down you need to decouple it from investments because otherwise, all the levers will be pulled by the governments and banks to make sure that line only goes up regardless of demographics. "Too few babies are being born? No problem, we'll just market those houses to foreign investors. Problem solved. Line goes up now."
I agree that housing prices are somewhat decoupled from local population trends, but at the end of the day _someone_ has to live on the property for it to be worth anything. In order for the speculation to pay off, somebody, at the end of the day has to pay for it to use it, otherwise it's just a ponzi scheme.
It might take a long time, but at some point the chickens will come home to roost. Or roast...
>I agree that housing prices are somewhat decoupled from local population trends, but at the end of the day _someone_ has to live on the property for it to be worth anything.
Internal migration is a big thing even in countries with tanking birthrates. Entire villages are being emptied as old people die and their kids move to the cities for studies and work. The population overall is shrinking but housing demand in cities is still growing fast.
So yes, you can have a booming property market in a country with shrinking population. Nobody's gonna live in those forgotten villages with cheap empty housing but no schools, universities, hospitals, doctors, jobs and entertainment opportunities.
>at the end of the day has to pay for it to use it, otherwise it's just a ponzi scheme.
The housing market can stay irrational longer than you can stay solvent.
Look at external migration from the last ~5 years then. Wars, povery, political extremism, climate change, etc. refugee waves will only continue so I'm pretty sure hosuing demand wil keep going up no matter how your local demographics tank.
Safe to assume housing market aint going to go bust anytime soon if you live anywhere in the first world cities.
That's assuming western countries let refugees in. Right now, that's not on the political agenda. That might change if the housing market forces their hand but between xenophobia and greed, I'm not sure which one wins out in the end
Because there's rising demand due to more people moving to cities and tourism. Also don't forget Europe's population is still growing despite a low birth rate.
The places where people want to live shift accordingly. Small towns and villages prices fall, large cities rise astronomically - even in places with slowly declining population like Poland.
It's not about where people want to live, but where most jobs are. Historically rapid urbanization started with industrialization, which reduced jobs in countryside, and created news mostly in urban areas.
I think it's worth asking why the jobs are in the cities. Given our information economy, why do the jobs need to be in the cities? My theory is that humanity (and subset of it) behave a bit like neural network. Social networks - neural networks. They both process information. And the social network in a city has a better shape. Villages have insular clique-y networks. Sure there are connections outward - but not enough. Ideas cannot spread as quickly. This makes them worse at processing information so they are outcompeted by the cities.
True if homes are owned by individuals only. Having companies owning loads of real-estate throws a wrench into that (at least where this is common). For instance, in Zürich real new development projects are all owned by companies which almost exclusively rent.
To add salt to the injury, SBB (the federal railway company) entered the real estate market and rents exclusively. It feels like a government sanctioned way to keep people out of the housing market.
I think that one solution is to cut red tape on construction and remove related taxes or rent caps. Create the incentive to construct. Seldom any government does that, on the contrary it looks like they just reduce/remove the incentive to build.
[update] Also the regulation on gear/materials is insanely costly, in Dublin new houses need to have a BER [1] rating of 'A'. Looks great in paper but this severely increases the cost.
It will in rural areas, but the remaining population is still packing into the major cities. Same thing is happening in Europe with the €1 homes in empty villages.
What about native Germans though? At least here in Finland plenty of natives move away from the capital to smaller bordering towns once they start a family. Advantages are reduced cost of living, and improved safety & schools.
It happens here too, either willingly or not. At some point the city just isn't suitable either because of cost, infrastructure (especially for raising kids) or general unpleasantness.
But for most immigrants it's really hard to feel at home in a small town halfway around the world.
With the rise of investors, second homes and single-person households, demand is going up even as population decreases. (This is a generic statement about what I see in the west. I don't know the situation in Korea.)
I'm from a country with a demographics falling off the cliff, like Germany but worse, and just like Germany, housing prices (where jobs are) have went nowhere but up at a steep rate beyond wage growth, because housing is not a fixed pie for whom now less people are competing due to increased deaths vs births, because for a few decades now, it's no longer just people competing for housing against the other people, but piles of money competing against other piles of money, and the bigger piles are winning(aka investors).
If you expect housing to get cheaper because less babys will be born, you'll be in a rude awakening. If you want housing to go down you need to decouple it from investments because otherwise, all the levers will be pulled by the governments and banks to make sure that line only goes up regardless of demographics. "Too few babies are being born? No problem, we'll just market those houses to foreign investors. Problem solved. Line goes up now."