Qingzhou, China – June 16, 2025 – The citizens consider the sand table in the sales office of a commercial residential property development in Qingzhou City, province of Shandong, China on June 16, 2025.
CFOTO | Future publication | Getty pictures
China's real estate sector has dealt with an in -depth downturn for years. Now a shrinking population throws another shadow over the stagnating real estate market.
Goldman Sachs estimates that the demand for new houses in Chinese urban cities will be suppressed with less than 5 million units per year in the coming years – a quarter of the highlight of 20 million units in 2017.
“A falling population and the slowdown of urbanization indicate that the demographic demand for living space was reduced in the coming years,” said Goldman Sachs economist in a note on Monday.
According to the latest data from the World Bank, the country's population is estimated to be below 1.39 billion by 2035, said Tianchen XU, Senior Economist at Economist Intelligence Unit, in a combination of less newborns and more deaths from an aging population.
The population of China has decreased in the past three years. The latest government data for 2024 showed that they dropped by 1.39 million after the previous year as the birth rates decreased.
In the 2020s, the shrinking population will cripple the demand for 0.5 million units and a larger dent of 1.4 million units per year in the 2030s. Goldman Sachs estimates compared to the positive contribution of 1.5 million units in 2010 when the population increased steadily.
The fertility rate in the country continued to decrease in 2016 after the loosening of Beijing, and despite Beijing's efforts to make the children's current through cash incentives. Stagnating income, instability to work and a bad social security system have held Chinese young people from getting more babies.
Beijing's pronatalist policy will probably have “limited effects” because they do not address the deeply rooted problems, such as high economic costs for child current and the tendency of people to postpone the marriage for the progress of professional progress and to shift “a hug of individuality”.
In the past two years, almost 36,000 kindergartens across the country have closed for the falling birth rates, with the number of students in preschools back over 10 million. This applies according to the calculation of the official data by CNBC, which the Ministry of Education has published. Similarly, the number of primary schools fell by almost 13,000 between 2022 and 2024.
This is due to school adjacent housing markets, on which once inflated prices for the strong demand for better public schools.
The one-valued premium was heated by access to elite schools and the expectations of rising real estate values. According to William Wu, China Property Analyst on the Daiwa Capital Markets, the added value of these houses on the basis of a shrinking population and the local governments that train the guidelines for the district base has been based on the added value of these houses.
A mother of a 7-year-old boy in Beijing told CNBC that the price of her apartment had fallen by about 20% over two years ago when she bought it. It cost her about twice as high as the average price for an apartment in the city, so that her son could attend a good primary school.
According to diaper information, the number of children who entered primary school in 2023 reached the highest level for over two decades before it was enrolled in 2024, the year in which her son was enrolled.
Steeper burglary
This demographic shift is an additional overhang on the real estate market, which has had difficulties since the end of 2020, from a painful downturn. Despite a number of measures by the central and local government since last September, the real estate strike has shown little signs of the deposits.
According to Larry Hu, chief economist China, at Macquarie, the new real estate prices extended in May in May. Despite the state efforts to arrest the decline, he extended a two -year stagnation.
The new turnover of homes in 30 large cities fell by 11% in the first half of this month compared to the year and deteriorated compared to the 3% drop in May.
“For the foreseeable future, the owner of investment real estate is likely to be net buyers (for owner occupiers)”, about the expectations that real estate prices will continue to decrease, Goldman Sachs estimates.
While Goldman expected the increase in China's urbanization rate to temperament in the coming years and affected the demand for urban housing, Wu said that the demographic train on the real estate market has not yet been “immediately” and could take decades until it takes place.
In the closer term of office, “part of this decline is compensated for by continuous urbanization and demand for housing busters,” said Wu, since the latter would make up an increasing proportion of China's entire real estate needs.
– Evelyn Cheng from CNBC contributed to this story.