More people, same space

More people, same space

There's no better time to invest in property and you can almost pinpoint this down to a couple of vary factors, but one which stands out amongst them all is population growth.

Yes, of course we all know about the Government's lack of building enough houses has caused some of this problem, and there's no denying that fact, however even if the levels of house building over the last 2 decades had kept pace and hit their Government set targets, we would still probably have a supply and demand problem.

Population growth can be attributed to a few key changes in society.

Medical advancements

It's clear and simple, people are living longer and this has been mostly due to medical advancements that have been made. Furthermore, as we move further into the future, you can expect people to live even longer and be productive and active longer as well.

Medical science has undergone somewhat of a renaissance in recent years largely due to technical advances in other areas like software, computing, big data, and hardware.

Companies who've sprung up with incredible new techniques and devices have changed the way medicine will work forever. In fact there is already several companies out there making personal "tricorders", the magical devices first imagined in Star Trek in the 1960's which could diagnose a whole range of medical conditions just from a handheld device. These futuristic ideas are soon becoming reality.

It's not just medical advancements helping people live longer, it's also a change in general attitudes and moods towards unhealthy things like smoking and drinking alcohol towards healthier active lifestyles with good nutrition.

There is so much more information on good nutrition these days that it's hard to ignore and that is having a good general impact on society.

Baby boom all over again

If you look at overall population graphs it's clear as day that since the 1960's baby boom, there has been a lull in population growth throughout the 70's, 80's and 90's. Until of course you reach 2000 when you see a sudden jump in population growth that hasn't subsided.

When you match that part of the graph from 2000-2016 back to the 1960's, you'll see that we are in fact experiencing a new baby boom of the 21st century.

Everyone is having babies, and that means the population is increasing rapidly. When you think about it, the first lot of babies born in 2000 will be 16 years old this year and in a few more years time many of them will be out in the workforce earning a living, and a percentage of them will be out looking for homes to buy or rent.

That's a large percentage increase that will continue to increase as each year goes by and a new cohort of 21st century baby boomers comes of age.

The Immigration equation

There's no denying that immigration has a lot to do with population growth in any country as the world is far more transient that ever before. Global travel has become increasingly more affordable which means more people travel to work and live in other countries.

Couple this with political problems in countries which cause mass migration of refugees from war and you add to the increasing growth. The UK has experienced this in part due to it's economy recovering from the 2008 financial crash faster than most other countries.

In creating more jobs and opportunities, it makes the UK more attractive to migrant workers and this has created an influx of EU and non-EU people coming to live here.

Increasing partner separation

This is an unfortunate societal change that is happening but it's relevant enough to make a difference.

There are more people in society choosing divorce or just to live separately from their partners when things don't work out in their relationships.

This puts pressure on the housing market as more single parents enter the market looking for smaller properties. This is why in the last 2 decades there has been a significant growth in the desirability of 1 and 2 bed small properties in any buy to let portfolio.

People in separations tend to have far less capital to part with and therefore mostly end up having to rent.

Will this population growth stop?

It's hard to say, but everything comes to an end eventually. I once read a book which talking about the generational cycles which societies go through and these cycles typically last 40 years or so with a 20 year up swing and 20 down.

The book covered a range of topics for societal ideals to governmental changes that occur and it seems strangely coincidental that the last baby boom was in the 1960's which is 40 years from 2000.

If this theory about generational cycles is correct, that would mean a substantial population growth until 2020 when it will peak, and then a gradual slowdown over the next 20 years to 2040 when it would hit a growth low.

So, more people, same space, no increase in house building all leads to one thing, much more demand over supply and that is great for professional property investors.

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