China's Future Housing Market

The opinion article below argues the housing boom is over due to demographics. Children born after the 1990s are only children, so a 90s generation married couple has two sets of parents who live in 2 homes. When they pass, both homes go to the children. That married couple also likely only has 1 child.

Considering the demographic argument and the the crappy housing argument (China has many low quality homes), there may be a lot of future teardowns.

中国楼市未来：90后继承至少两套房 需求逆转

The last few weeks, from a supply point of view of the author of China's real estate market, "China in the end how many houses? "A paper calculates that as of the end of 2013, China's urban housing stock area of ​​about 17.52 billion m2 - 24.024 billion square meters, plus the rural 23.367 billion square meters, total up the upper limit of up to 47.4 billion square meters.

In the "really do not need to buy a house robbed! "This article is calculated as of December 2013, in addition to residential real estate for sale area of 324 million square meters, as well as in the construction of residential housing 4.635 billion square meters. A rough calculation, this part of the inventory needs time to digest five years, of course, a larger difference in the cities, the city needs a concrete analysis of concrete.

So, this week, First Financial Daily "financial business" from the demand point of view to discuss the next: the demand side is the most important demographic factors, although this is a long-term factor.

Behind two suites

The near future, leaving a suite grandparents, grandparents remain a suite, and the case is indeed the age of 90 smaller groups are facing.

In both suites behind the accelerated aging. An aging population, there is a common international indicators, namely the population over the age of 60 to 10% of the total population, or over 65 years the proportion of the total population reached 7% as a country or region to enter the standard of an aging society .

If you press the second measure, China around 2000 entered the aging society, the proportion of Chinese aged 65 and over population in 2000 to 6.96% in 2001, 7.1% of the data. (Figure 1)

The sixth census data in 2011 showed that China's population aged over 60 and the proportion of 13.26%, a total of 179 million, 65 years and older accounted for 8.87%, the absolute number of nearly 120 million. By the end of 2013, China 65 years and older accounted reached 9.7%.

From the growth point of view, every year since 2000 to 0.2 percentage points to 0.4 percent growth rate, which means that China is accelerating the aging process. Accelerated aging is a result of social and economic development activity decreased because fewer people work.

UBS Securities was in the "Asian Structural Themes - Aging in Asia," the report predicts Chinese elderly population accelerated after 2010, will continue to accelerate aging around 2030, 2010 to 2030 people over the age of 60 years average growth rate reached 3.66% in 2030 to 2050 the average annual growth rate down to 1.26%. By 2050 China's population aged over 60 will account for 31.1% of the total population, much higher than the average level of 21.9% of the time in the world.

Why is there an aging population?

Phenomenon is much older, but the reason behind the change in fertility levels and life expectancy, which surpasses the latter affect the former is much larger, as China's aging, both of the two factors.

From the two censuses in life expectancy data, in 2010 the data is 74.83 years, while in 2000 was 71.4 years, 10 years, an increase of 3.4 years among. The top of the improved life expectancy will increase the relative population pyramid, that is at the top of aging.

From watching the birth rate, after the third baby boom from 1987 onwards from the beginning of China's birth rate declined 2.33 percent in 2009, the birth rate is to start from less than 1.2%, although a weak rebound since 2011, but the overall trend die hard. The low birth rate is the bottom of the population pyramid is relatively reduced, or the bottom of aging.

Globally, aging leads to negative population growth has become a curse, such as Japan, Germany, these countries are also unable to get rid of negative population growth fate. However, compared to other countries, China has the aging process faster, shorter intervals, lower level of development characteristics.

Data show that the major Western countries to complete the aging of the population (the proportion of the population aged 65 and over increased from 7% to 14%) of the time span is usually 40 to 100 years, Japan was 25 years.

The Chinese sixth census of the population aged 65 and over accounted for 8.87 percent, up 1.91 percentage points from the 2000 census. Moreover, according to conservative UN estimates, China accounted for the population aged 65 and over will be the first to meet or exceed 14 percent in 2025. Namely China and Japan, as 25 years of aging population will also be completed, counting from 2014, only 11 years.

All in all, the low fertility levels and the average life expectancy to rise, driven by China's population pyramid will appear at the top, at the bottom of aging. Popular, fewer people are working, fewer people have the purchasing power, older and more conservative spending habits, demand for real estate what will happen? I believe the conclusion is self-evident.

Of course, given China's huge population base, the absolute amount of demand for real estate is certainly high, but in the bottom of the pyramid top of the aging population trend, the demand for real estate growth is undoubtedly slowing or even reversed. (The author is a "financial business" assistant editor, microblogging: @ Ai Jingwei CBN, forthcoming, "the housing market recession," a book)