In the corridors of Beijing, policymakers toasted the implementation of the 2014 Two-Child Policy (TCP) to stem the tide of declining birth rates. But the popping champagne may have drowned out another sound: the swelling crescendo of the housing boom. A new study, “Do housing booms reduce fertility intentions? Evidence from the new two-child policy in China”, details how housing bubbles break younger generations, using post-2014 China as an example.
Why it matters: China’s demographic and housing markets are on a collision course. With the new TCP, Beijing envisioned nurseries bustling with babies. However, this study sharpens our focus on an often-overlooked variable: the economic headwinds of housing booms. As property prices soar, the dream of larger families dims. Policymakers need to heed that birth rates don’t just thrive in a vacuum; they are intrinsically tied to broader economic realities.
What they found: Booming housing markets and the TCP are engaged in a delicate dance, each pulling China’s demographic aspirations in opposing directions. While the TCP nudges couples towards more prominent families, skyrocketing real estate prices, particularly the staggering housing price-income ratios, force them to think twice. And for the so-called “qualified couples,” the dream of a second child seems buried under mortgage applications and rising home prices.
What they’re saying: China’s fertility blueprint might have overlooked a critical detail: housing affordability. The seductive allure of the housing market, with its promise of wealth and stability, seems to have an unintended side-effect — acting as an invisible hand that dissuades family expansion. For family planning to succeed, it’s clear: China must juggle policies and prices. The equilibrium between affordable homes and family aspirations isn’t just desirable; it’s essential.
The problem: Zoom out, and the narrative gets gloomier. The CCP’s grand housing story, once a symbol of China’s meteoric rise, is now failing misrably. Rapid inflation followed by a startling deflation of the housing bubble has left the nation’s youth in a quandary, navigating the troubled waters of unemployment and frozen wages. And this isn’t a China-exclusive saga. From the U.S. to the U.K., and even in South Korea, housing market tremors are reshaping national destinies, jeopardizing economic foundations, and darkening the futures of a generation already under siege from other societal pressures.
Beating the Dead Horse: It’s not just about policy papers and regulations. The future — both in terms of babies and buildings — hinges on a delicate balance between dreams and affordability. China’s lesson serves another lesson as a global cautionary tale. Economic realities and demographic aspirations are more intertwined than ever, and the playbook for the future needs a rewrite.