How property prices affect fertility

Years of research show that there is indeed a negative relationship between house prices and fertility. That's the shorter answer. Here's the longer one.

The big study on the relationship between housing prices and fertility comes from the fall of 2024. While most previous work has relied on large-scale US data, this one used a century-long dataset of house prices from up to 14 countries (the United States, Canada, Japan, and eleven Western European countries).

Author Wenchao Li calculates that a 10 percent increase in housing prices reduces the average number of children per woman by 0.01 to 0.03. This is a similarly strong effect as an increase in female education.

However, the impact of rising prices is different for homeowners and different for renters. For owners, rising prices increase wealth, which leads to an increase in fertility. For renters it is the opposite, although there is a grey area of owners who would like to increase their family size and want to move to a bigger house.

NBER research on US data has evaluated this effect to increase fertility by five per cent for owners and decrease it by 2.4 per cent for renters for every additional $10,000 of property value. It should be noted, however, that the research is from 2011.

Thus, the resulting balance is dependent on the homeownership rate of the critical group (people aged 20 to 45). As owners get older, and if joining the homeowners club becomes more difficult, the ratio of owners to renters changes over time, which also affects the resulting balance towards a negative net effect on fertility.

Where the property is located also makes a difference. High population density leads to lower birth rates compared to more sparse suburbs and rural areas. This effect is most pronounced in Asian megametropolises such as Seoul or Shanghai, but has also been described in a European context. The limited common spaces (courtyards, courtyards) in such developments are considered to be the source of the differences.

What to do about it? In his book Build baby, build! argues in favour of widespread deregulation of building laws, which would loosen the shackles on massive construction, depress prices and increase birth rates.

Others use more traditional financial subsidies to buy property for a target group of young families. However, the effectiveness of such spending is unclear. Unless the fall in prices is permanent, such subsidies may only cause a shift in the decision to have children over time, but not a shift in the intended number of children. Fertility will then be positively affected only in the short term.

Most of the analyses do not address the causes of the increase in housing prices. However, this is the key question - even if it is not asked entirely correctly.

For example, Slovak house prices have risen by 96 per cent since 2018. The S&P 500 index is up 127 percent over the same period, gold is up 203 percent, and bitcoin is up 1,492 percent.

It's not just real estate prices that are rising, the prices of all assets in which financial value can be "parked" are rising. Perhaps we should therefore not be talking about the rise in the price of housing, but about the fall in the value of money and its link to fertility.