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# families
Financial pressures and lack of affordable housing linked to low fertility rates
A Trinity College symposium suggested that housing finance and pension systems depresses young couples’ ability to form households and as a result has also depressed fertility rates in that country.
THE IMPACT OF financial sectors on fertility rates in OECD countries was explored yesterday at a conference in Trinity College Dublin.
Speaking at the symposium, Professor Herman Schwartz from University of Virginia explored how the financialisation of housing finance and pension systems has depressed young couples’ ability to form households and as a result has also depressed fertility rates.
Babies
In his presentation Babies, Bonds and Buildings: Did Financialisation Affect Fertility Rates?, Professor Schwartz explained:
Many rich OECD countries now have fertility rates well below the replacement rate. Most attention on fertility rates looks – correctly – at work-life balance issues, but the relationship between housing finance and pension systems also affects the availability and affordability of housing.
He said earlier household formation enabled higher fertility rates, because couples that start having children earlier tend to have more children.
However, he said the deregulation and de-segmentation of housing finance has turned houses – via mortgages – into assets.
Affordable housing
“This combined with rising income inequality to produce continuous upward pressure on housing prices relative to income. Even in the relatively more liquid housing finance systems, rising house prices made it more and more difficult for young couples to afford housing. This has contributed to downward pressure on fertility,” he said.
Professor Schwartz said low fertility implies declining population and potential problems for pension systems.
He said surveys show that the average couple in the rich OECD countries desires more children than they actually have, however, even in the relatively more liquid housing finance systems, rising house prices and declining affordability, makes it more and more difficult for young couples to afford housing. This has contributed to downward pressure on fertility.
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