I’ve been thinking about something that I believe most people who are mildly interested in the property market have thought about at least once. If the human population in general is dwindling, or at least it’s not growing as much as it was before, wouldn’t this mean there is less demand for residential real estate, and wouldn’t this push prices down eventually?
I mean, of course I know about speculation and stuff. But that can only keep prices up for so long. Eventually speculation stops and the real value becomes apparent.
There is the argument to be made that in some pockets, particularly in the developed world in world-class cities, there will always be more people wanting to move in than people leaving or dying. So is this the case then? Does it become a matter of just knowing where to invest?
Even then, I see that of the developed world simply does not have the population growth needed to justify such exhorbitant real estate prices. Most rich countries are actually losing people, if it wasn’t for migration. Once migration is exhausted, and the poor countries run out of people to send or have demographic crises of their own, then what? Another possibility is that the political environment in rich countries makes it so that they close migration, sending property prices down.
This is already happening in countries like Australia. Most people attribute the housing unaffordability crisis to high migration, which makes sense at face value.
I’m no real estate investor or an expert on migration policy, and I don’t fully buy migration being blamed completely for housing unaffordability. I think unaffordable housing prices are dangerous but a full on burst of the bubble can be too painful for any one country. Way too many people have most of their life assets tied up on real estate. I think eventually it will deflate and I hope it does in a way that most people are not worse off.
Maybe wishful thinking.