China’s real estate sector has grappled with a deepening downturn for years. Now a shrinking population is casting another shadow over the stagnant property market.
Goldman Sachs estimates that demand for new homes in Chinese urban cities will remain suppressed at under 5 million units per year in the coming years — one fourth of the peak of 20 million units in 2017.
“Falling population and slowing urbanization suggest decreasing demographic demand for housing” in the coming years, Goldman Sachs economists said in a note Monday.
The country’s population is estimated to fall to below 1.39 billion by 2035 from 1.41 billion, according to World Bank’s latest data, said Tianchen Xu, senior economist at Economist Intelligence Unit, citing a combination of fewer newborns and more deaths from an ageing population.
Shrinking population will cripple home demand by 0.5 million units every year in the 2020s and a lead to a bigger dent of 1.4 million units annually in the 2030s, Goldman Sachs estimates, compared to the positive contribution of 1.5 million units in the 2010s when population was on a steady rise.
