China population decline is hurting its property market
Qıngzhou, China – June 16, 2025 – Citizens, on June 16, 2025, the city of Qingzhou, China, in the province of Shandong, a commercial housing development sales office watching the sand table.
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China’s real estate sector struggled with a deepening decline for years. Now a shrinking population makes another shadow on the stagnant real estate market.
Goldman Sachs estimates that the demand for new houses in Chinese urban cities will be suppressed under 5 million units a year in the coming years – one quarter of 20 million summits in 2017.
Goldman Sachs economists in a note on Monday, “falling population and slowdown urbanization and urbanization slowing down shows the decrease in demographic demand for housing,” he said.
It is estimated that the country’s population will fall below 1.39 billion by 2035. According to the latest data of the World Bank, 1.41 billionEconomist Intelligence Unit Senior Economist Tianchen Xu referred to a combination of more deaths than a less newborn and aging population.
The population of shrinkage will store 0.5 million units every year in the 2020s every year, and the Goldman Sachs will lead to a migration of 1.4 million units in the 2030s, compared to the positive contribution of 1.5 million units in the 2010s, where the population is a stable increase.
The fertility rate in the country continued to decrease Beijing despite the attempt to encourage Beijing to carry children through cash incentives in 2016 and Beijing in 2016. Stagnant income, instability on business expectations and a weak social security system, Chinese young people have more babies to have more babies.
XU said Beijing’s pronatalist policies would probably have a “limited impact” because they did not address radical issues.
Underlining the decreasing birth rates, approximately 36,000 kindergartens throughout the country have closed the last two years and the number of preschool students fell more than 10 million. This is according to CNBC’s calculation to the authority Data published the Ministry of Education. Similarly, Number of primary schools Between 2022 and 2024, it fell approximately 13,000.
This is fluctuating in residential markets near the school, which once sees inflated prices behind strong demand for better public schools.
Once upon a time, the premium was fueled by the expectations of access to distinguished schools and increasing property values. However, according to the Chinese property analyst at Daiwa Capital Markets, William Wu, a shrinking population and local governments withdraw their regional registration policies and began to decrease the added value of these houses.
He said that the mother of a 7 -year -old child in Beijing fell to CNBC about 20% when the price of the apartment bought it two years ago. In order for his son to go to a good elementary school, the average price of an apartment in the city has doubled.
The number of children entering primary school in 2023 reached the highest level in more than twenty years before falling in 2024 in 2024, according to wind information.
More upright collapse
This demographic change is an additional protrusion to the real estate market, which has been forced to get out of a painful decline since the end of 2020. Central and local government measures have been a sign of reducing real estate collapse since last September.
According to Macquarie’s chief economist Larry Hu, the new house prices fell to the fastest speed in May in May and extended a two -year stagnation despite the government’s efforts to arrest the fall.
Hu, 30 big cities in the new home sales, in May 3% decrease in the first half of this month decreased by 11%, he said.
“Investment property owners are likely to be net sellers (owners) for the predictable future,” Goldman Sachs said.
Goldman, in the coming years, while waiting for the increase in the urbanization rate of China to damage the demand for urban housing, Wu Real Estate Market demographic drag is not yet “close” and can take decades to play, he said.
In the near future, “Some of this decline will be balanced with the demand for constant urbanization and housing upgrade,” Wu said, the second will explain a increasing share of China’s total housing demand.
– Evelyn Cheng from CNBC contributed to this story.
