European Demographics

The UK has one of the better demographic trends for house prices compared to other countries, with average families of 1.8 and a net immigration. However, both Spain and Italy have only 1.2 and the population of Italy is forecast to reduce to 40 million in the next 30 years from 55 million in the 1990s. This will certainly not help demand and for this reason I would be very cautious about buying property in Italy. Spain has 1.2 though the net flux of foreigners buying holiday homes is huge hence property in the south coastal area where population is increasing should stay firm, though I wonder whether Madrid will go into the doldrums?

In Germany, the situation is not good – the eastern German people in particular have not been having large families and the German population will decline. Both the Netherlands and Scandinavia are healthier. The theory is that for women in the more traditional, often Catholic, cultures in the south of Europe, child minding is either not available or very expense and difficult to find – couples have tried to both work and this has lead to families starting later, being smaller and sometimes not starting at all. It’s a complex social phenomenon with many facets, but if you go north and west in Europe, it seems people have larger families – may be it’s all those cold dark rainy nights in winter! There is also the reluctance or not of government to allow immigration – the UK has always been a country with reasonably high immigration levels which has helped support and increase population levels – this is not the case in countries like Italy and Austria. For this reason, I see increasing population in the north western areas of Europe, decreases in much of south and eastern Europe and selective increases in holiday destinations where some foreign retired people or holiday homers will settle (e.g. southern Spain, southern France, Greece, Cyprus, a few spots in Italy e.g. Sorrento).

If you put a marker pen along a map all the southern coastal area of the European countries, this correlates quite well with likely areas of future population increase! “Head South”. These demographics have to be considered when property investing, since of course they tend to drive the demand side of the supply/demand equation, albeit in theory one can still have a declining population and increased demand if everyone decides to have more than one home!

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