Advertisement
China census and demographics 2021
OpinionComment
David Chao
David Chao

Opinion | China’s census suggests property boom days may be over

  • Falling birth and marriage rates represent longer-term headwinds for the Chinese property market
  • Changes in access to investment products may also drive investors away from real estate as an asset class

Reading Time:3 minutes
Why you can trust SCMP
6
A man walks past the reflection of residential buildings in a park in Shenyang, Liaoning province. The housing market is seeing rising vacancy rates in cities including Dalian, Harbin and Shenyang. Photo: Reuters
David Chao

The census results released by China’s National Bureau of Statistics earlier this month confirmed a challenging reality for the country – its population growth is slowing, and quickly.

Advertisement
China’s population still grew over 5 per cent between 2010 and 2020, but this figure was the lowest increase on record since the founding of the People’s Republic. Demographers and economists are focused heavily on how such a low birth rate and likely shrinking of the population will impact the domestic economy and broader society.

But this trend will have a more immediate impact on one of China’s most impressive growth segments since it liberalised its economy – the real estate market.

Property prices have steadily increased, with home prices rising 23 per cent since 2010. Despite policy curbs, home prices grew at the fastest pace in eight months in April, with new home prices up by about 0.5 per cent month on month and sales up by about a third year on year.

Looking forward, supply-side policies to limit price growth will continue to tighten, and demographic challenges will change the demand outlook. Taken together, it’s apparent that the residential market’s boom days are likely behind us – both in terms of prices increases and developers’ record profits.

Rising property prices have been driven mainly by a growing middle class investing in real estate, with affluent households seeking yield and income on the one hand, and local governments relying on high prices to drive highly lucrative land sales to developers on the other.

Advertisement