House prices hitting fertility as couples hold off on children
HOUSE prices are damaging Irish fertility rates, causing our overall population to fall.
Professor Herman Schwarz from the University of Virginia in the US, who is an expert on housing bubbles, said the modern financial system and the pressure it put on house prices was partly to blame for the low fertility levels seen in many developed countries.
Speaking in Trinity College Dublin yesterday in a presentation called 'Babies, Bonds and Buildings', Mr Schwarz argued that people were delaying having children because of the cost of housing.
Prices are under continuous upward pressure from the financial system, Prof Schwarz explained, which treats mortgages as tradeable assets on the open market.
This made it more difficult for young couples to afford a home, he said. As a result, they delayed starting a family -- which reduced the overall number of births every year.
"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," said Prof Schwartz.
His theory ties in with statistics from the European Commission showing that people right across the EU are postponing -- or even putting off child-rearing altogether as they cope with the economic downturn.
This is true even in Ireland -- despite the fact that we still have the highest fertility levels in the EU. The fertility rate -- defined as the average amount of children born per woman -- stood at 2.05 children in 2011, down from 2.1 in 2008.
This means Ireland is not even managing to sustain its population, and will result in a diminishing workforce.
European Commission research found that fluctuating employment rates, another consequences of the 'free market' financial system, had also been clearly linked to recent falls in birth rates in Greece and Latvia.
The financial world, the symposium held in Trinity heard, has had many other unintended but damaging social consequences beyond fertility.
Manchester University Business School Professor Julie Froud said too much emphasis on the financial sector was actively damaging non-financial businesses.
Financial markets had become so powerful, Prof Froud said, that governments must now sponsor and protect them, resulting in them making decisions at the expense of other areas of the economy.
Trinity lecturer Dr Louis Brennan added it was important that Ireland shone a spotlight on these issues given how devastating the 2008 financial crisis was for Irish people.
"Given the role the financial sector has played in Ireland's recent history, it is particularly instructive to have the perspectives of renowned international authorities on the sector," he said.