Europe’s population will halve this century as soaring house prices combined with the fallout from Covid lockdowns force couples to have fewer children.
The continent could be home to fewer than 350m people by the end of the 21st century, according to economist James Pomeroy at HSBC, down from more than 700m today.
He said: “Whilst economic development typically lowers fertility rates, in developed markets there is some evidence that fertility rates are being held back by elevated house prices as couples postpone their first child, partly as people tend to get married later, but also because they have to save for longer in order to buy a family home.”
This has become a particular problem since the pandemic struck, driving up demand for larger properties and making family homes more expensive across the rich world.
Mr Pomeroy said: “Given the moves in house prices in the course of the past few years, this is already adding to very high house prices, particularly relative to incomes.
“In Germany, Netherlands, Canada and New Zealand, house prices are more than 30pc higher than they were in 2015 relative to incomes. For many younger households, with lower levels of incomes, these homes, particularly those large enough in which to raise a family are now out of reach.”
On current trends, China’s population is set to tumble from 1.42bn people now to 1.17bn in 2050, with Hong Kong shrinking from 7.5m to 6.7m. India will overtake China as the world’s most populous nation, rising from 1.42bn this year to 1.55bn by the middle of the century.
The US, bolstered by a higher birth rate than China as well as a traditional openness to migration, will have 345m people in 2050, up from 338m today.
HSBC said that buying a home was out of reach for the average couple in their twenties in the UK based on current house prices and earnings of young adults with a mortgage of 4.5-times their income.
Mr Pomeroy added: “Earnings need to be nearly 20pc above the median for a home to be remotely achievable, and that’s before the fact that a 3-4 bed home (to raise a family) is likely to cost more than the median house price that includes a large number of flats and 1-2 bed properties.”
The average house price hit £286,000 in June, according to the Office for National Statistics, up 7.8pc, or £20,000, on the year. Price growth has slowed recently, but the typical property still cost almost £3,000 more in June than it did in May.
Meanwhile the cost of living is rising rapidly across Europe, as post-pandemic distortions in the economy combine with Russia’s invasion of Ukraine to send inflation into double figures in much of Europe.
“Couples thinking about starting a family may think twice”, given the expense of raising a child and wider pressure on their finances, said Mr Pomeroy.
If current trends continue, he expects the global population to peak as early as 2043, four decades earlier than the United Nations forecasts, even after the organisation cut its predictions for the fertility rate.
This is expected to result in lower growth for the global economy and tougher challenges for the public finances as fewer young workers will be paying tax to fund services needed by older citizens, HSBC said. It added that this would also result in “more unsustainable” Government debts as fewer people are working to pay taxes to service rising piles of borrowing.
Potential solutions include encouraging people to have more children, but HSBC warned this “typically had limited success in raising birth rates materially”. It also suggested reducing the cost of childcare or promoting immigration to bring in more workers, but conceded: “this may not prove politically popular in many places”.
Now, this is a problem no one talks about.
These articles are driving me nuts. It points out a blatantly obvious situation. Adds a few new pieces of statistics and that’s it.
Is there a solution? Is there anything positive coming out of this? (Less pollution for example.) If somehow we’d tax the rich companies, would that work? What is the ratio between empty/unused houses and the market for them? Why can’t we just build more houses? Not enough bricks or concrete, or we ran out of carpenters and plumbers?
On children: how come schools and kindergartens don’t have sufficient staff and founding while there are hardly any children left? How are highly developed countries fare on child numbers comparer to less developed ones?
How will this affect politics? Are we headed towards a gerontocratic system as the younger generations will never have the voting power to become policy makers?
My solution:
Step 1.- Lower taxes for the rich
Step 2.- Privatize public services
Step 3. – ???
Step 4.- Problem solved
Fixing this is possible but it requires voiding a ton of existing interests.
Hey, at least we got free healthcare! (for now)
Europoors also getting fucked by rich daddies… Interesting. I thought that was reserved for the US and third world.
It’s the best way to reach the Paris agreement..
Wonder how companies are going to keep up their crazy profits when they suddenly have half as many customers.
We were supposed to be below 80 million in Germany at this point, now we’re heading for 86 million…
If you want to make housing affordable for young couples, then you need to lower demand and raise supply. Forbid investors from buying residential properties and zone more areas for residential construction.
Open borders /s
wat
the long dick of global capitalism just keeps pounding until one person has all of the money
Rubbish journalism.
While I agree the price of housing is a problem, there is very little evidence that is behind declining birthrates. In developing countries where housing is more expensive relative to income the birth rate is still usually higher. This also matches with historical data. In the past when housing was even more expensive than it is now, relatively, birthrates were still higher. If housing prices and other cost of living issues did negatively affect birthrates, we’d expect to see family size increase with wealth. We don’t.
Birthrates have little correlation to housing price and strong negative correlations to things like contraception access, education, and overall socio-economic development.
I mean I was under the impression that Europe was already going down that road.
16 comments
Europe’s population will halve this century as soaring house prices combined with the fallout from Covid lockdowns force couples to have fewer children.
The continent could be home to fewer than 350m people by the end of the 21st century, according to economist James Pomeroy at HSBC, down from more than 700m today.
He said: “Whilst economic development typically lowers fertility rates, in developed markets there is some evidence that fertility rates are being held back by elevated house prices as couples postpone their first child, partly as people tend to get married later, but also because they have to save for longer in order to buy a family home.”
This has become a particular problem since the pandemic struck, driving up demand for larger properties and making family homes more expensive across the rich world.
Mr Pomeroy said: “Given the moves in house prices in the course of the past few years, this is already adding to very high house prices, particularly relative to incomes.
“In Germany, Netherlands, Canada and New Zealand, house prices are more than 30pc higher than they were in 2015 relative to incomes. For many younger households, with lower levels of incomes, these homes, particularly those large enough in which to raise a family are now out of reach.”
On current trends, China’s population is set to tumble from 1.42bn people now to 1.17bn in 2050, with Hong Kong shrinking from 7.5m to 6.7m. India will overtake China as the world’s most populous nation, rising from 1.42bn this year to 1.55bn by the middle of the century.
The US, bolstered by a higher birth rate than China as well as a traditional openness to migration, will have 345m people in 2050, up from 338m today.
HSBC said that buying a home was out of reach for the average couple in their twenties in the UK based on current house prices and earnings of young adults with a mortgage of 4.5-times their income.
Mr Pomeroy added: “Earnings need to be nearly 20pc above the median for a home to be remotely achievable, and that’s before the fact that a 3-4 bed home (to raise a family) is likely to cost more than the median house price that includes a large number of flats and 1-2 bed properties.”
The average house price hit £286,000 in June, according to the Office for National Statistics, up 7.8pc, or £20,000, on the year. Price growth has slowed recently, but the typical property still cost almost £3,000 more in June than it did in May.
Meanwhile the cost of living is rising rapidly across Europe, as post-pandemic distortions in the economy combine with Russia’s invasion of Ukraine to send inflation into double figures in much of Europe.
“Couples thinking about starting a family may think twice”, given the expense of raising a child and wider pressure on their finances, said Mr Pomeroy.
If current trends continue, he expects the global population to peak as early as 2043, four decades earlier than the United Nations forecasts, even after the organisation cut its predictions for the fertility rate.
This is expected to result in lower growth for the global economy and tougher challenges for the public finances as fewer young workers will be paying tax to fund services needed by older citizens, HSBC said. It added that this would also result in “more unsustainable” Government debts as fewer people are working to pay taxes to service rising piles of borrowing.
Potential solutions include encouraging people to have more children, but HSBC warned this “typically had limited success in raising birth rates materially”. It also suggested reducing the cost of childcare or promoting immigration to bring in more workers, but conceded: “this may not prove politically popular in many places”.
Now, this is a problem no one talks about.
These articles are driving me nuts. It points out a blatantly obvious situation. Adds a few new pieces of statistics and that’s it.
Is there a solution? Is there anything positive coming out of this? (Less pollution for example.) If somehow we’d tax the rich companies, would that work? What is the ratio between empty/unused houses and the market for them? Why can’t we just build more houses? Not enough bricks or concrete, or we ran out of carpenters and plumbers?
On children: how come schools and kindergartens don’t have sufficient staff and founding while there are hardly any children left? How are highly developed countries fare on child numbers comparer to less developed ones?
How will this affect politics? Are we headed towards a gerontocratic system as the younger generations will never have the voting power to become policy makers?
My solution:
Step 1.- Lower taxes for the rich
Step 2.- Privatize public services
Step 3. – ???
Step 4.- Problem solved
Fixing this is possible but it requires voiding a ton of existing interests.
Hey, at least we got free healthcare! (for now)
Europoors also getting fucked by rich daddies… Interesting. I thought that was reserved for the US and third world.
It’s the best way to reach the Paris agreement..
Wonder how companies are going to keep up their crazy profits when they suddenly have half as many customers.
We were supposed to be below 80 million in Germany at this point, now we’re heading for 86 million…
If you want to make housing affordable for young couples, then you need to lower demand and raise supply. Forbid investors from buying residential properties and zone more areas for residential construction.
Open borders /s
wat
the long dick of global capitalism just keeps pounding until one person has all of the money
Rubbish journalism.
While I agree the price of housing is a problem, there is very little evidence that is behind declining birthrates. In developing countries where housing is more expensive relative to income the birth rate is still usually higher. This also matches with historical data. In the past when housing was even more expensive than it is now, relatively, birthrates were still higher. If housing prices and other cost of living issues did negatively affect birthrates, we’d expect to see family size increase with wealth. We don’t.
Birthrates have little correlation to housing price and strong negative correlations to things like contraception access, education, and overall socio-economic development.
I mean I was under the impression that Europe was already going down that road.