Negative population growth, house prices to plummet? This is the biggest misconception about the property market

In the past two years, there has been a view that has prevailed:

The population is growing negatively, and house prices are about to plummet!

At first glance, the logic seems impeccable. The population is growing negatively, and no one will take over in the future, isn't the house price about to fall?

In fact, this view is precisely the biggest misunderstanding of the property market.

The view of a big V on Weibo is very representative. He said that the most fundamental problem is that the population growth is negative.

And also gives data support - you see that in 2022 the population will decrease, and fewer houses will be transacted.

The population has decreased more this year, so the number of house transactions will definitely decrease even more.

In the context of the cold property market, many people's houses in their hands have fallen, and the voice of singing about the decline of the property market is particularly easy to get traffic.

However, having traffic does not mean being right.

The negative growth of the total population may have nothing to do with housing prices! Why do you say that?

First of all, population growth is negative, and house prices are not necessarily going to fall, and are even likely to continue to grow.

Look at our neighbor South Korea.

South Korea's fertility rate fell to 0.78 in 2022, the lowest on record, ranking first among major countries.

It was even ridiculed by many as "the first country in the world to die out naturally".

South Korea not only has a very low fertility rate, but also has reached a bottleneck in urbanization rate, hovering at 82% all year round and no longer increasing.

What's more, South Korea's real estate tax is ridiculously high, reaching 1.2%-6%, and the real estate tax for multiple homes is even as high as 65% to 75%.

It can be said that the Korean property market is full of negative buffs that we can think of.

But so what? South Korea's housing prices are still rising.

In 2022, the average house price in Seoul, South Korea, will exceed 90,000 yuan/㎡, ranking among the top five major cities in the world.

The fertility rate and housing prices have shown completely opposite curves, and Japan is also in East Asia.

Japan's population has been declining since 2010 and has been declining for 12 years now.

Japan's population fell by 730,000 last year, a negative growth that is much more dramatic than ours for a country with a population of 125 million.

But what about house prices?

A decade ago, when the total population was still increasing, Japan's housing prices fell for decades.

In the past ten years, the population has failed, and housing prices have suddenly turned over! Since 2012, the average house price in Japan has been rising.

And like the newly built homes in Tokyo's 23rd ward, housing prices have even risen to a record high since 1990.         

There are many more such examples.

Hong Kong, whose population has been declining since 2016, has supported the world's highest housing prices.

Monaco, which has only 36,000 people in the country, costs 320,000 yuan per flat.

Even Russia, known for its vast land and sparse population, the population has been falling, but house prices have been rising...

Why is the population shrinking and house prices rising?

Because the core factors that determine the trend of house prices are economic growth and monetary aggregate.

In the case of relatively stable supply of real estate in large cities, as long as the total demand remains at a certain level, it is enough to maintain the prosperity of the property market.

For example, the number of students enrolled in Tsinghua Peking University every year is fixed, so the quota is counted, 10 million candidates or 12 million candidates compete, which hardly affects its admission difficulty.

You'll have to squeeze into the first few thousand to have a chance to get a ticket.

And with the growth of the economy, the total amount of money is increasing. It is equivalent to more and more high-scoring candidates, and the admission score line naturally rises.

In fact, the logic behind it is that simple.

Take South Korea as an example, as we said earlier, South Korea not only has a low fertility rate, stagnant urbanization, but also has a heavy real estate tax.

Even so, it did not bring down South Korea's high housing prices at all.

However, what is the reason why South Korea has begun to fall recently? Analytically, it has nothing to do with population.

In 2022, South Korean President Yoon Seok-hyeol announced that 2.7 million housing units will be provided in the next five years, of which 1.58 million will be provided in the metropolitan area and 500,000 in Seoul!

At the same time, a rate hike was announced.

Since the August 2021 rate hike, South Korea has raised interest rates six times, with benchmark interest rates soaring to 3.5% and mortgage rates as high as 7%-8%.

As a result, South Korean house prices began to fall. And a fall is free fall.

As of the first quarter of this year, house prices in Seoul, South Korea, have fallen by 25%.

The influence of monetary policy and supply on housing prices can be seen.

The same routine is the same in our country, just recall the two bailouts in 2008 and 2015.

In 2008, the 4 trillion plan was launched, and in 2015, the shed reform was monetized.

It's all about monetary policy and supply.

Time goes back to the present, and it is still the same situation.

Reduce existing housing loans, reduce loan interest rates, promote the transformation of urban villages, and resettle housing tickets... The cyclicality of the property market is vividly reflected at this moment.

For home buyers, whether you can buy the right house at the right time depends entirely on your perception.

Of course, if you look at the large cycle of several decades, when the total population decline is very large, which greatly affects the demand for buying a house, of course, it will also have an impact on house prices.

However, it will take at least 20 years to gradually become a reality.

In the final analysis, what really has an impact on housing prices is the number of home-buying age and migrants.

Let's talk about the home-buying age population, which is the main force supporting the price of the property market.

Generally speaking, people with rigid housing needs and improvement needs are concentrated in the 25-55 age group.

From the number of births in the mainland over the years, it can be seen that there are two waves of peaks in the number of births.

They were 1963-1973 and 1981-1991.

The peaks of these two waves of birth population correspond to the age of the home buyers.

That is to say, although the era of demographic dividend in our country is over, for the property market, the structural demographic dividend is still continuing.

More importantly, a significant part of these home-buying age people have not yet met their needs.

On the one hand, although 921 million people in our country work and live in cities and towns.

But just because these people work in towns doesn't mean they can fully enjoy all the rights of their location — including buying a house.

If we look at it more seriously, the urbanization rate of the mainland's household registration population is only 47.7%.

On the other hand, according to statistics, by 2015, 7.6% of households in mainland cities and towns did not have independent kitchens, and 25.8% did not have independent flush toilets.

This means that we still have a lot of rigid needs and needs for improvement that have not been released.  

Let's talk about the floating population, which is an important factor driving property prices.

Previously, scholars in the United Kingdom, Canada and other countries have done research on the effect of population migration on housing prices.

The conclusion is that the demand for housing due to population migration has increased greatly, and it will have a direct impact on housing prices.

Domestically, this is also evident.

In the 90s, Shenzhen, Dongguan and Shijiazhuang were the most populous cities.

At the beginning of this century, a large number of people began to flow into Beijing and Shanghai.

In the past ten years, Shenzhen, Chengdu and Guangzhou have been the cities with the largest inflow of population. In these cities, housing prices have ushered in an outbreak during the period of population blowout.

With the "liberalization" of the first line and the strong second line, the flow of home buyers and wealth is becoming more and more obvious.

As someone said, love will only flow to those who do not lack love, and purchasing power will only flow to cities that are not short of money.

The changes brought about by the purchasing power of urban "siphons" far exceed the impact of negative population growth.