Housing Price Collapses With Working Age Population Collapse
Japan’s overall population fell from 128.1 million in 2010 to 122 million today but Japan’s working age population peaked in 1995.
Japan’s overall population fell from 128.1 million in 2010 to 122 million today but Japan’s working age population peaked in 1995. If we discount the economic bubble then the real estate collapse from the 1990s to today correlates with the working age population collapse.
It is also the aging of the population. The median age increased from 37 to 49. Peak consumer spending is about 48. The people who work declines and drops production of income and people age and drops the demand. The real estate collapse in Japan crushed the wealth of the middle class. This is what will happen soon to China, Europe and the world economy.
There are some people who assume that population decline will make the world better and eventually there would be a turnaround to people wanting to have kids. The people in 80 years would have lived through generation after generation of declining incomes, housing prices and mostly long economic depressions and recessions. If the people today have less hope for the future, why would we expect our descendents to have hope for the future if there we are handing them decades of economic hardship?
Another thing to remember is that national and other debts are increasing and the growing burden falls on fewer and fewer people. The per person debt will skyrocket. This would lead to default on the debt
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This will continue and get over twice as bad for Japan. Japan’s median age will hit 53 in 2040 and 54 in 2050.
China will hit median age of 47 in 2040 and 50 in 2050.
China and much of Europe are already heading into the same issues that Japan did.
Property prices in China are down 20% with the Evergrand real estate speculation collapse
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An analysis from 1975-2015 in Japan shows, housing price falls faster with declining population than it increases with increasing population. However, in more recent periods, while the correlation between house price decline and population decline stays robust, the relationship between house price increase and population increase disappears. This confirms the overall decline in housing prices across regions since the bubble burst, regardless of population growth.
In reality, negative effects on housing prices from population decline may be even larger than model predictions. The results suggest a larger decline in housing price associated with population loss than a housing price increase with the same size of population gain. Given the shrinking population in many prefectures, a further housing price decline could be a medium-and long-term trend. The linkage between population loss and a housing price decline could lead to a vicious cycle—residents expecting a housing price decline may sell their houses and have less incentives to own houses, which will add to already-existing oversupply for houses and create further downward pressures on housing prices.
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