https://www.msn.com/en-gb/money/othe...dc262e44e3f3b1

Europe’s population will halve this century as soaring house prices combined with the fallout from Covid lockdowns force couples to have fewer children.

The continent could be home to fewer than 350m people by the end of the 21st century, according to economist James Pomeroy at HSBC, down from more than 700m today.

He said: “Whilst economic development typically lowers fertility rates, in developed markets there is some evidence that fertility rates are being held back by elevated house prices as couples postpone their first child, partly as people tend to get married later, but also because they have to save for longer in order to buy a family home.”

This has become a particular problem since the pandemic struck, driving up demand for larger properties and making family homes more expensive across the rich world.

Mr Pomeroy said: “Given the moves in house prices in the course of the past few years, this is already adding to very high house prices, particularly relative to incomes.

“In Germany, Netherlands, Canada and New Zealand, house prices are more than 30pc higher than they were in 2015 relative to incomes. For many younger households, with lower levels of incomes, these homes, particularly those large enough in which to raise a family are now out of reach.”

On current trends, China’s population is set to tumble from 1.42bn people now to 1.17bn in 2050, with Hong Kong shrinking from 7.5m to 6.7m. India will overtake China as the world’s most populous nation, rising from 1.42bn this year to 1.55bn by the middle of the century.

The US, bolstered by a higher birth rate than China as well as a traditional openness to migration, will have 345m people in 2050, up from 338m today.

HSBC said that buying a home was out of reach for the average couple in their twenties in the UK based on current house prices and earnings of young adults with a mortgage of 4.5-times their income.

Mr Pomeroy added: “Earnings need to be nearly 20pc above the median for a home to be remotely achievable, and that’s before the fact that a 3-4 bed home (to raise a family) is likely to cost more than the median house price that includes a large number of flats and 1-2 bed properties.”

The average house price hit Ł286,000 in June, according to the Office for National Statistics, up 7.8pc, or Ł20,000, on the year. Price growth has slowed recently, but the typical property still cost almost Ł3,000 more in June than it did in May.

Meanwhile the cost of living is rising rapidly across Europe, as post-pandemic distortions in the economy combine with Russia’s invasion of Ukraine to send inflation into double figures in much of Europe.

“Couples thinking about starting a family may think twice”, given the expense of raising a child and wider pressure on their finances, said Mr Pomeroy.

If current trends continue, he expects the global population to peak as early as 2043, four decades earlier than the United Nations forecasts, even after the organisation cut its predictions for the fertility rate.

This is expected to result in lower growth for the global economy and tougher challenges for the public finances as fewer young workers will be paying tax to fund services needed by older citizens, HSBC said. It added that this would also result in “more unsustainable” Government debts as fewer people are working to pay taxes to service rising piles of borrowing.

Potential solutions include encouraging people to have more children, but HSBC warned this "typically had limited success in raising birth rates materially". It also suggested reducing the cost of childcare or promoting immigration to bring in more workers, but conceded: "this may not prove politically popular in many places".