How will demographics change the property market?

For years, the attractiveness of property investment was determined primarily by location, building standard and access to financing. In the coming decades, however, another factor will become increasingly important: demographics. Poland is on the threshold of one of the largest demographic transformations in its history, and its consequences will be felt not only by the labour market and the pension system, but also by the entire property sector.

Forecasts prepared by Statistics Poland (GUS) in the publication “Population Projection for 2023-2060” indicate a lasting downward trend in population numbers and the progressive ageing of society. This means that, over the next several decades, both the structure of housing demand and the need for specific types of property will change.

According to the main scenario, Poland’s population will decline from approximately 37.7 million people in 2022 to approximately 30.4 million in 2060. This represents a population decrease of more than 7 million people. Even the most optimistic forecast variant assumes a fall in population to 34.8 million residents, while the pessimistic scenario projects a decline to only 26.7 million people. Regardless of the assumptions adopted, all forecast variants point to a systematic contraction of Poland’s population.

At the same time, the process of population ageing will continue. In the coming decades, the share of people aged 65 and over will increase significantly, while the number of children and young people will decline. As a result, older people will account for approx. one third of the population, which will translate into entirely new housing and investment needs.

One of the greatest challenges will also be the shrinking of the working-age population. According to forecasts, by 2060 the number of economically active people will decline by several dozen per cent. Consequently, the demographic dependency ratio will increase significantly. Whereas in 2022 there were around 70 persons of non-working age for every 100 persons of working age, under the main scenario the number of persons above working age will reach approx. 105 by 2060. This means that the number of people supporting the economic system will gradually decrease, while the number of people requiring social support will rise.

Demographic changes will also be affected by a decline in the number of births. Statistics Poland forecasts a further decrease in the number of women of reproductive age – from approximately 8.7 million in 2022 to 4.8 million – 6.3 million in 2060, depending on the scenario adopted. This means that the low number of births will persist and depopulation processes will deepen.

FIGURE 1. AGE PYRAMID OF THE POPULATION (THOUSANDS) IN 2022 AND IN 2060 UNDER THREE FORECAST SCENARIOS

source: Statistics Poland (GUS), Population Projection for 2023-2060.

For the property market, these data are of fundamental importance. While until recently, the main challenge was to meet growing housing demand, in the future the adaptation of the offer to the changing structure of society will become increasingly important. The growing number of seniors, the rising share of single-person households and continuing migration to the largest urban centres will mean that not all locations will develop at the same pace. As a result, demographics will become one of the key factors influencing property values. This does not mean, however, that the entire property market is facing a slowdown. These changes will affect individual regions in very different ways, leading to increasing differentiation between local housing markets.

A Two-Speed Poland

Poland is gradually dividing into two different worlds: dynamically developing metropolitan areas and towns and municipalities struggling with population outflow. This phenomenon is increasingly referred to as a “two-speed Poland”. Demographic forecasts indicate that Poland’s population will steadily decline, but this process will not be uniform. Most municipalities and smaller towns will record a decline in population, while the largest agglomerations will continue to attract new residents thanks to attractive labour markets, renowned universities and well-developed infrastructure. As a result, the division between regions that are developing and those gradually losing their demographic potential is becoming increasingly clear.

The largest urban centres, such as Warsaw, Krakow, Wroclaw and Gdansk, will remain the main beneficiaries of internal migration, and young people will continue to move to large cities in search of better jobs, education and broader professional development opportunities. For the property market, this means sustained demand for homes in well-connected locations, units intended for rental, properties in suburban zones and modern residential developments. This means that the largest agglomerations are likely to maintain high price levels thanks to the inflow of new residents, students and employees from abroad.

The situation may look completely different in many smaller towns and municipalities, where the outflow of young residents, a low birth rate and the progressive ageing of society may lead to a gradual weakening of demand for property. In some locations, the number of available homes may exceed the number of potential buyers, translating into slower price growth, longer sale periods, a larger number of vacant dwellings and a decline in investment attractiveness. In many smaller localities and on the outskirts of large cities, downward pressure on prices can be expected as a result of a declining population, an ageing society and an increased supply of homes entering the secondary market. In the locations most affected by depopulation, some properties may become difficult to sell.

New Directions of Demand in the Property Market

A decline in population does not necessarily have to lead automatically to a fall in demand for property. The changing structure of households plays a key role.

More and more people live alone or form two-person households. At the same time, the model of multi-generational living is becoming increasingly rare. As a result, the number of homes needed may remain high despite a declining population. This trend is already influencing developers’ strategies, as they increasingly design smaller, more functional flats that meet the needs of singles, young couples and older people.

Seniors account for an increasingly large share of society, which will translate into growing demand for homes adapted to their needs. Units without architectural barriers, equipped with lifts and providing easy access to medical care will attract increasing interest; with limited supply, this may lead to growth in their value and rental costs. The growing importance of the so-called silver market will influence both the direction of new investments and the modernisation of existing housing stock.

The greatest interest will be in energy-efficient properties that are well connected and located close to public services and healthcare. The institutional rental sector may also play an increasingly important role, because high purchase prices for homes and the limited creditworthiness of some households will mean that more people use long-term rental. This will particularly apply to singles, young workers and seniors seeking smaller, functional flats in attractive locations.

Summary

Demographic changes will affect not only the location of investments, but also the structure of demand for property. Homes intended for one- and two-person households, units adapted to the needs of seniors, multifunctional buildings providing easy access to services, and properties located near public transport and healthcare facilities will become increasingly important. The ageing of society will also increase demand for care, rehabilitation and medical facilities. This means that the property market will have to move away from a model focused primarily on quantity and concentrate increasingly on quality and on aligning the offer with residents’ actual needs. The growing importance of the so-called silver economy will mean that architecture and spatial planning will have to take into account the needs of an ageing society. At the same time, traditional home ownership will cease to be the only form of ensuring housing stability, and various rental models may play a greater role. For investors, this means the need to look at the market from a new perspective. Alongside housing prices, interest rates and rental yields, the question of whether a given location will still attract residents in 15-20 years will become increasingly important. Demographic potential itself may become one of the key factors influencing property values, and investment success will increasingly be determined not only by the standard of the building and the attractiveness of the location, but also by the long-term development prospects of the city or region. Demography is no longer merely a statistic; it is becoming one of the most important factors shaping the future of the Polish property market.