European Demographic Changes up to 2050

Property investment is for most people a long-term financial undertaking – so with this in mind, it seems prudent to consider future long-term demographic changes that will affect supply and demand for property in Europe up until 2050. A hundred years ago, the European population was 14% of the world’s population. Today this is down to 6%. By 2050 it is forecast by the United Nations to be 4%.

The UN predict the population of the EU will contract by 7.5 million people over the next 45 years – this assumes that there will also be a net immigration of 6.8 million – hence the indigenous population will decline by some 14 million. In the USA the population will grow by 40% in the same period.

It is not increasing mortality but the low fertility rates in many European countries that will be responsible for this shrinkage. People are getting married later; having fewer kids and many only have one or even no children. If the Italians keep their low fertility rate, and there is not a significant rise in immigration, the UN forecasts the population will drop by 30%.

In Eastern European countries, the population is forecast to drop by 25% in the next 45 years. That said the prices are likely to rise significantly in most of these countries the next few years as most of them join the EU, but in the longer term I would be very careful since demand will most likely be reduced for all but the nicest retirement property as the population dwindles.

The median age of the Greeks, Italians and Spaniards is projected to exceed 50 by 2050 – one in three people will be over 65 years old. Clearly to pay for these retired people, either taxes will have to go up to say 75%, or state pensions and health care expenditure will have to be drastically reduced.

In NW Europe, the situation is more healthy - in the UK, Scandinavia, Holland, Belgium and to a lesser extent France. But in eastern and southern European countries, there will be a significant decline in the population.

<< Previous Page || Next Page >>