China’s housing demand set to drop as the population ages, real estate broker predicts

Chinese property broker Beike expects housing demand to decline domestically over the next decade. Pictured here on June 28, 2022, is a new commercial residential complex in Nanning, Guangxi Zhuang Autonomous Region, China.

Beike predicts that demand for residential real estate in China will decline over the next 15 years.

The company's research arm said in a report shared with CNBC that new demand for housing by floorspace is set to drop by 2.5% a year over the course of the next two decades. One of China's largest housing brokerages is owned and operated by Beike.

China's aging population is the main reason for the decline.

The age 15 to 64 working population with the sum of those younger or older than that age range peaked in 2010.

After Japan and Korea reached a similar peak, their housing demand declined.

Moody's says that real estate and related industries make up 25% of China's economy. Real estate is the main source of household wealth. Beijing has tried to limit the use of debt by developers.

According to Beike, the transaction value is expected to grow by 1.8% a year for the next 20 years, bringing the annual value to 29.2 trillion.

Even with declining floorspace demand, the level will remain a large 1.33 billion square meters.

According to the U.S. Census Bureau, 2.2 billion square feet of single- family homes were completed in the US last year.

According to Beike, most of China's new housing demand will likely be met by remodeling or reconstruction of existing properties.

Tang Xuan, senior analyst at Beike's research institute, said that there will be more people interested in moving to major metropolitan areas like Beijing and Shenzhen.