For a long time, the Chinese real estate market has been struggling with growing economic stagnation, which until now does not allow the industry to get out of a difficult situation. Recently, however, the decreasing population has become another problem, additionally undermining the perspectives for the housing market.
The calculations of Goldman Sachs show that the demand for new residential premises in state urban centers may in the coming years Do not exceed five million real estate a year. It would be just One quarter of the record level from 2017, when twenty million apartments were bought.
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Analysts of this financial institution at the same time indicate that such a decrease is associated with both a lower population and slower urbanization. In the published report, they note that due to these factors, demographic demand for new premises will be systematically falling.
Demographic disaster in China
According to the recent analyzes of the World Bank, the number of China residents may fall from the current 1.41 billion to a level lower than 1.39 billion in 2035. As Tianchen XU from Economist Intelligence Unit noted in his comments, this result results from both a reduced number of newborns and a growing percentage of deaths related to the aging of society – writes CNBC.
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The domestic natural growth indicator has been at a negative level for three years. According to government administration information over 2024, it shows that over the past year the population has shrunk by 1.39 million, which is associated with the still decreasing number of births.
According to experts from Goldman Sachs, a further decrease in the number of citizens will reduce the demand for apartments by another half million premises a year in the 2020sand in the next decade it can be up to 1.4 million per year. In the last decade, the increase in the population was provided by the average annual positive contribution to the housing market of 1.5 million.
Meanwhile, the birth rate is still decreasing, although in 2016 the policy of one child was softened and stimuli encouraging to have offspring were introduced. Uncertain professional perspectives, a slight increase in salary and limited social security cause that many young people give up larger families – we read in CNBC.
The effects of a lower birth rate are already noticeable in education. According to data from the Ministry of Education, in the past two years About 36,000 were closed kindergartenand the number of children enrolled in them decreased by over 10 million. A similar trend applies primary schools-in the years 2022-2024 their number fell by almost 13 thousand.
Flats prices are falling
According to the Chinese economist in Macquarie, Larry Hu, In May, the prices of new apartments have decreased at the fastest pace for seven months, extending the two -year descent. Various initiatives taken by the central and local authorities have not yet managed to break the negative series.
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In thirty largest agglomerations The sale of just built apartments fell in the first half of June by eleven percent on an annual basiswhich means a deterioration of the situation compared to a three % decline observed in May – indicates Hu.
Goldman Sachs estimates that people with investment real estate will be rather willing to get rid of their assets in the face of expected further drops in prices.
According to William Wu, real estate analyst at Daiwa Capital Markets, the effects of demographics will not begin to be felt immediately. The trend of population defect extends for many years, which gives time to increase interest in buying more modern and better finished apartments.
