Will China's Two-Child Policy Change Housing Demand?

Text: Forbes

China is loosening its one-child policy, which leads an economist to wonder how the demand for housing will respond. The United States experience argues for little impact, though China may go its own way.

Over the past 40 years American houses have been getting larger and larger, going from 1660 square feet for new construction in 1973 to 2657 square feet last year. This 60 percent increase in average house size came while the average household size fell from 3.01 people to 2.54. In short, we did not downsize our homes as our families got smaller.

The chart shows an interesting blip in 2010. Contrary to trend, household size increased. This came from adult children living at home, unmarried people living with roommates instead of by themselves, and couples unable to afford divorce. That same year average house size decreased, an unusual development, as the recession reduced demand for larger homes.

China has also seen falling household sizes. The average is now 3.02 people living together, down from 3.96 in 1990. House size has increased from 30.8 square meters (332 square feet) to 89 square meters (958 square feet) since 1978, according to one report.

China’s two-child policy will probably have large consequences on a variety of economic indicators, but look for average house size to be driven by incomes rather than family size.

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