Bad news for those hoping for a broad recovery soon in China’s residential property market. Xiguang Cao (et al.) from the East China University of Political Science and Law has looked at 287 Chinese cities from 2005-2018 to see if aging populations correlate with lower house prices; and they do.
Studies from the mature markets of the U.S., Canada and Japan have all come to the same conclusion but the researchers believe their study is the most comprehensive carried out in a developing market.
The paper pinpoints specifically changes that occur with consumption and labor supply as populations age. Thus, there are significant regional differences and China-wide aggregate date should be used cautiously.
All things being equal though the paper concludes a 10% increase in population aging leads to an 11% decline in urban house prices (they were careful to try and strip inflation from the equation).
My own two pennyworth would be to note the regional differences qualification in the work. Anybody who’s been to Shenzhen recently can’t help being struck by the ubiquity of bump-y young women and rookie dads nervously folding/unfolding new strollers.
I’d be loath therefore to predict that market, or others with similar demographics, running out of puff anytime soon N.B. China’s a big place.
You can access the work in full via this link Aging and House Prices.
Happy Sunday.