At the ULI Europe 2017 conference in Paris, Sarah Harper, professor of gerontology and director of the Oxford University Institute of Population Ageing, shared a series of startling facts about demographics as they relate to the built environment.
By 2050, just 5 percent of the world’s working-age population will live in western Europe, whereas Asia and Africa will see huge increases in their share of that demographic. Sub-Saharan Africa in particular will become perhaps the most important region for construction and related industries.
Harper said the global population, currently estimated at 7 billion to 8 billion, should peak at 10 billion around 2050, according to U.N. estimates. Birth rates in parts of Africa, currently above four children per family, will fall back toward the developed world average of two children per family as a result of increasing education among females, as has happened elsewhere in the world.
“But if you ask women in Uganda how many children they would like, the most common answer is four, regardless of education,” Harper said. “Perhaps there is something about African society or family structure which means they won’t revert to the mean.”
If that is the case, United Nations estimates that the population of Africa, currently 1.3 billion, would double by 2050 could be way off, and in fact, the population could grow to 6 billion.
On a separate panel, Massimo Saletti, J.P. Morgan global cohead of real estate, gaming, and lodging, said that given Europe’s historic ties to Africa, growth could present a huge opportunity for the industry. But Jon Zehner, global head of client capital at LaSalle Investment Management, noted that given the lack of governance in much of the region and vast wealth inequality, it could constitute a huge problem as well.
One fact standing out in relation to western Europe is the sharp increase in the number of people living to extreme old age. People over age 85 now constitute the fastest-growing sector of the population in developed economies. By 2080, more than 8 million people age 100 or older will be living in the United Kingdom, compared with fewer than 1 million today, and there will be more than 124 million centenarians across Europe.
This will pose significant challenges for society, principally in terms of the cost of care for people living longer, often with poor health and mobility or cognitive impairment. The rise in extreme aging also affects relationships between generations and the passage of wealth from generation to generation.
Housing is central to meeting the challenges of an aging population, Harper noted in a follow-up interview with Urban Land, but if policy does not recognize the rate of aging, housing will also be part of the problem.
“Housing is one of society’s most important sectors for well-being,” she said. “Across Europe, population aging will inevitably affect housing supply, demand, and use, which in turn will touch health, lifestyle, and even inheritance. Policies for homeownership, private renting, and social housing must adapt.”
Harper highlighted the need to create more specialized housing to meet the needs of people living longer in ill health, or housing that can be adapted to meet that need, and the need for more intergenerational living to reduce housing demand.
“Population aging is set to affect housing demand: more homes that meet the needs of older people will be needed, with new ones to be built and existing ones adapted,” Harper said. “This means homes with larger, more accessible bathrooms, for example. Downsizing can also help older people manage their household more efficiently.
“Where downsizing is not the optimal solution, intergenerational living may be. It can improve upward and downward care, prevent social isolation, and reduce costs for families. As the number of generations who are alive at the same time increases, the prevalence of intergenerational living is set to rise. Countries where its share is relatively low, like the U.K., could learn from the experience of its European neighbors, like Ireland or Italy, where it is high.”
It will not be easy to address these housing needs, Harper said. Not enough affordable housing is being built to meet current needs in the United Kingdom, let alone the needs that will be created once the population has aged dramatically.
“Adapting will require an approach which looks at the housing needs of the young as well as the old,” she said. “This means knocking down barriers to affordable, adequate housing for both the young, who need to begin building a solid foundation for their financial future, and older people, who have specific needs.
“Alleviating demand for affordable housing among young families can moderate prices in the wider housing market, ultimately making downsizing or refitting more economically viable. A life-course approach also means accounting for the barriers to intergenerational living, such as the impact of inheritance tax on co-owned properties,” he said.
“Meanwhile, financing and incentives for the construction of new, specialized housing stock will necessarily vary across countries, regions, and cities. Measures for facilitating the construction of certain types of housing, like affordable housing, already range from tax credits for developers to the direct deployment of public money. Likewise, there are many models of financing the retrofitting of older homes to make them more energy efficient. These types of targeted interventions will be needed to adapt housing markets for an ageing population as well.”