When a country's citizens buy more adult nappies than kids' nappies, it's time to ask questions.
In particular - what does it mean for property prices?
Let me explain...
Statistics in Japan now reveal that because of its ageing population, the country's seniors create more demand for nappies than the country's infant population.
Japan is an extreme example of what happens when a country ages. It has the oldest population of any country in the world, with a median age of 44.6 years.
That's unless you include the tiny Principality of Monaco, inhabited by its ageing billionaire playboys (who bring the median age up to 48.9).
Australia is a sprightly 37.5 years in comparison.
The changing demographics of a country's population are one of the biggest drivers of long-term economic trends, particularly house prices.
When an army of baby-boomers spend a generation working productively, and investing in property, prices tend to steadily rise over those decades.
But when that generation ages and it comes time to sell and downsize - what happens then?
The results were shocking when this process began in Japan.
To start with, the Japanese property market peaked when its retirees begun to outnumber its workforce.
And since then property prices have HALVED.
Is Australia Turning Japanese?
Now it looks like Australia is about to go through the same process.
You can see what happened in Japan clearly in a recent chart from Citi. It shows how closely real estate prices (light blue, LHS) have followed the 'dependency ratio' (dark blue, RHS, inverted)...
The dependency ratio calculates the ratio of those outside the workforce (mostly retirees, but also children) against those of working age.
In Japan, the dependency ratio clearly turned around at the same time as property prices, and has followed the 20-year long downtrend ever since.
If you look at this data for the United States, the United Kingdom, Ireland and Spain, they all tell a similar same story.
The only difference is the story has only been going for the last five years, not twenty like in Japan.
But in demographics, it's possible to accurately forecast where population trends will run over the coming decades. That means, assuming no war or plague in that period, you get a pretty good idea of where the dependency ratio will be, all the way to 2030.
The bad news for Aussie property owners is that in Australia, our dependency ratio turned a few years ago.
And it's no coincidence that this happened exactly the same time that property prices peaked.
It gets worse. The demographics project that over the next two decades at least, the growing army of Australian retirees will increasingly outnumber Aussie workers.
In other words, for the next twenty years, there will be more baby boomers every year looking to sell property as they rationalise their assets for retirement.
If Japan, the US, UK, Spain and Ireland are any kind of precedent, could the weakness in Aussie prices over the last eighteen months just be the start of a long, drawn out retreat in the great Australian property market?
Aussie Property to Slowly Retreat as the Country Ages?
Source: Citi
Demographics aren't the only thing driving prices of course. Any number of factors, from interest rates, to employment rates, and good old-fashioned supply and demand, are critical in the short or medium-term.
But this shift in balance from workers to retirees is a slow tectonic force. It will gradually increase supply of housing over years and decades, gradually taking the edge off prices unless a greater force emerges.
As an extreme illustration of the relationship between demographics and property, Detroit in the US is hard to ignore.
The Detroit population halved as the city's main employment, the motor industry dried up. This has left an unmanageable oversupply of property, from homes to schools, to hospitals.
This huge overhang has brought Detroit property prices down from around $100,000 to less than $13,000 today. To see just what Detroit looks like as the city's buildings decay, click here.
This is a drastic example of course, but it shows what can happen to a housing market in the face of powerful demographic changes.
