Growing up in the North of England was grim. But to this black and white existence a sudden burst of colour was added when a French teenager, Vanessa Paradis, came on television, with her song ‘Joe le Taxi’, wearing a baggy apricot jumper, she swayed to the sound of an exotic saxophone. Entering senior school our imaginations were captured, I believe Johnny Depp was quite taken too.
Ten years on, I spent the summer doing an internship in London and met a glamorous Parisienne lady. Turning twenty, she was closer to thirty, but agreed to go to dinner with me. There were no phones, no internet and I panicked as I was so terribly keen to impress her, but had no idea how to order a bottle of wine. Desperate not to expose my humble immigrant background, I asked my older brother who recommended to not order the cheapest wine on the menu, but rather the second cheapest. The Chablis was horrible, but the dinner in which she puffed very thin white cigarettes thankfully went very well.
The concept of ordering the second cheapest item is a common phenomenon for immigrants. For example, when my father moved to Liverpool, he bought a house not in Toxteth, the cheapest neighbourhood, but rather Croxteth. He had no idea about the area and as with a summer fling was thinking short term before moving back to India. Croxteth was rough; used needles cluttered the pavements, shattered glass on the roads and sharp teeth and angry eyes of the fighting dogs were matched by their owners. This was not a place for a wholesome childhood, but simple survival. Radom acts of violence, abuse and a lot of running was how children grew up in the north Liverpool suburb, is it any surprise that Wayne Rooney who grew up a couple of streets away could run so fast. The one thing that Wayne and I shared is neither would want our children to grow up there and in fact, it might be better not to have children than go through that again.
This sentiment is shared amongst many couples and following a sustained cost of living crisis, it is not surprising to read in the Evening Standard that there was a 20% fall in birth rates across London over the last ten years. But further analysis of births by boroughs highlight working class areas such as Newham (5,598) and Croydon (4,872) are racing ahead of the more genteel, tree lined boroughs of Richmond (1,827) and Kingston (1,726). As a result, it is largely in these more middle-class areas that schools are merging or closing, maternity wards shutting down and the chance of seeing pram pushing parents reduce by the day. Why is this relevant and does it matter?
Increasingly in European elections, immigration and race seem to be a driving factor. What we are seeing in London where both Newham and Croydon both majority non-white, is being replicated across the continent and giving fuel to far-right politicians to spread fear amongst the electorate. However, to my mind the right question is not about immigration, but rather why more local people are not having children? In Goya’s depiction of Saturn Devouring his Son, we can see the greed of an elder generation leading to take drastic action against his child, is this a parable for the European baby bust?
The fall in fertility rates across East Asia and Europe are widely reported and concerns are regularly raised, with generous financial incentives seeming to have little impact in Seoul, Singapore or elsewhere. Politicians fail to empathize with the idea of parental aspiration, where bringing a child into the world involves providing a safe and comfortable environment for them to grow up. This has increasingly become more financially difficult for young couples and the idea of having grown up with the equivalent of a solid Bordeaux and then offering your own children a cheap Chablis, is often very hard to digest for many prospective parents.
We all know about the multi decade long property boom across most advanced countries and as we can see in the chart below taken from the US (but equally applicable across Europe), the majority of family homes are being owned and occupied by empty nesters, whose preference to remain in situ is resulting in rising house prices and rents in desirable family locations.
I asked my local contact at Savills (Estate Agent) what he had seen over his many years working at the branch and the answer was not surprising. Continued shortage of family homes, very little down-sizing activity and far fewer British families able to afford to buy into the area. In fact, around half of recent family buyers were from overseas, looking to put down roots and educate their children in the excellent schools in the local area.
Not satisfied with general trends, I cajoled my neighbour (pictured above) to discuss in more detail. Will a successful barrister and now retired judge has lived with his wife in a family home on the outskirts of London. Following his hip operation, he hobbled across the road to enjoy a cup of tea (white no sugar) to discuss the matter more. He accepted that his generation had benefitted inordinately by the rise in property prices, but disagreed that falling births were due to people like him staying in desirable family homes, reducing supply and thereby increasing prices. Rather from his perspective the problem was one of levelling up and young people should not have to move to London to develop their careers, but should have such opportunities across the country, resulting in less pressure on housing stock. Alternatively, incentives could be provided for elderly singles to move from their homes, although he accepted after a certain age, comfort and familiarity are more important than a few extra pounds in the bank.
Let us assume that what we are experiencing in this London suburb continues to play out for the next thirty years, immigration falls substantially and there are reducing births each year – its not out of the question. To see what the future might look like, as always we need to head East, across the Eurasian landmass to Japan to highlight a trend that I first saw whilst living in a rural part of the country in the 1990’s. One of the Junior High Schools that I was working with had a total teaching staff of 12 teachers, looking after only five students (the town was full of elderly residents). Property prices had peaked in 1989 and were falling when I arrived nearly ten years later and today as we can see in the example below, this sizeable family home in the centre of Ashibetsu City, on a plot of over 300 square metres, like many other thousands of homes across Japan, is being offered for free.
Assuming these trends continue, in an excellent report by Tomoya Mori and Daisuke Murakami, titled, The Rise and Fall of Cities under Declining Populations, the researchers modeled how a number of smaller towns and cities would cease to exist and as a result, Japanese land prices would collapse:
At the same time, major cities such as Tokyo would continue to grow, but due to improved communication and transport links, they would continue to become less dense and more spread out (a trend that dates back to 1970), as we can see in the map below:
This is of course all conjecture and the success and livelihood of cities across the world is based on their ability to attract and retain young people and families. Without adequate housing stock that is not happening and it is no surprise that the most rapid fall in fertility rates are generally in ageing societies. In Europe, Germany is starting to experience this, with property prices falling by over 8% in the last 12 months (albeit higher interest rates also probably contribute). Immigrants like my family in the UK or the lovely Vanessa Paradis in the US may help in the short term, but not in the longer term.
This then explains why so many Governments are spending billions on encouraging young people to have children. In Tokyo they have gone so far as to create a state backed dating app, in which salaries are checked, tax certificates posted and applicants are required to pledge their commitment to get married. The desire is for local people, to marry, have children and continue the identity that has been in place for centuries – but each passing year that desire looks more like a dream.
It seems inevitable however over the medium term in most advanced economies, like in Japan, a consequence of low fertility and lower immigration will result in a fall in house prices. Hopefully this will give young people more options on where and how to raise a family and it means they will not have to turn to the second cheapest part of town, something I am sure Wayne Rooney and I am so pleased we did not have to do.
Interesting read Amit