Population and Housing in CEE

Let’s take the Czech Republic as an example.

This is the population at 1945. Images are from the Czech Statistical Office.

Note the missing chunk of population at age group 27 to 32. This is probably the result of both deaths/emigrations during WW1 (one generation earlier) and disruption of WW2. Also note that the population older than 45 taper off quite rapidly. Not only is this a result of turmoil and war, but also because of early healthcare standards. In these conditions the natural response is to have more babies. The group with average age 29 reproduce at a very high rate.

Now the parents and children bracketed in red by ‘a’ are a little older. By about 1948 the parents managed to multiply themselves 1.5 times. Also notice how the early dip in population repeats itself generation after generation (blue).

If we advance a generation to show what happened to the ‘a’ children, we see this:

In 1974 the children of the previous population explosion (followed by a repeat in the dip in population from WW1) are now old enough to replace themselves. They do so at just over 1:1. In contrast with the preceding WW1/WW2 aftershock population dip, the sudden increase in numbers of children are perceived as a babyboom.

These children in turn grow older, but now the Soviet Union is crumbling, and old traditions die as couples sacrifice family life for freedom (and then later debt). Couples have children at a later age:

Couples are now well into their thirties before they have children, and with their new lifestyle of mortgage repayment, increased divorce rate, and both parents working, the fertility rate has dropped.

Not only has the old babyboom – babydip cycle ended, but it has done so dramatically with the parent group almost halving themselves.

This demographic shows that there can be no foreseeable longer term increase in demand for residential or commercial property (from the native population). Most likely there will be some turn around of property though, as the current parent generation pay off debt, gain inheritance and enter the bracket of 50-70 year olds looking for other properties so that their children may carry on elsewhere. A possible consequence of this though is that the turnaround and deleveraging results in a drop in prices with increased volume of trade (as vacated larger properties find fewer young families willing to buy, and because current advertised prices are upheld by underlying debt).

There are two main wildcards. Remaining to be seen is when CEE post-soviet concrete residential tower blocks be deemed unfit for use and torn down. Currently in the CZ these ‘panalak’ tower blocks are being upgraded rather than demolished, and for the next twenty years should remain fit for use. Another scenario is that for some reason immigration increases, offsetting the local depopulation. Government and banking officials seem to have close links with the construction industry, and it would not be surprising if interests affected by housing devaluation prompted some kind of pro-immigration moves.