Chinese real estate crisis: the deep and unsolvable demographic roots
the mortgage strike we talked about a few days ago, in which credit recipients refuse to pay the installments if the value of the property is lower than that of the debt, is only the tip of the iceberg of an epochal problem not just for Chinese real estate, but for its entire company.
After the pandemic, the crisis in the development of the Chinese population intensified . The new UN demographic forecasts released earlier this month – the first in three years – indicate that China is poised to cede the status of the world's most populous nation to India next year. The United Nations has predicted that China's population will peak this year, rather than 2031 as previously estimated. The population is projected to shrink by 90 million – more than Germany's current population – by 2050.
source: United Nations
Even this prediction may be too optimistic, according to Julian Evans-Pritchard, a China economist at Capital Economics. The United Nations expects China's fertility rate to bottom out in 2021 and is set to grow slowly over the next 30 years. Evans-Pritchard said this is "implausible" and that fertility is more likely to decline, as has happened in other Asian countries in recent years. He pointed out that the United Nations has failed to predict the decline in China's fertility rate in recent years.
A shrinking population brings all sorts of problems, including slower economic growth and a pension crisis in a country where 50-year-olds are often already retired
However, as the graph above shows, the most immediate problem is linked to real estate demand, which is destined to decline steadily and continuously over time, reversing a trend that had existed for decades and therefore requiring a profound economic reform. According to Goldman Sachs estimates, demographic shifts are causing China's housing demand to drop from 8 million units a year in 2010 to just 1.5 million by 2050.
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The article Chinese real estate crisis: the deep and unsolvable demographic roots comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/crisi-immobiliare-cinese-le-profonde-e-non-risolvibili-radici-demografiche/ on Tue, 19 Jul 2022 07:00:03 +0000.