OP I agree with you and I do see where the pope is coming from. I know a lot of people like to repeat "the world is already overpopulated" line, but there isn't solid evidence for this. Indeed, there are a lot of researchers who think that we are actually headed for the opposite.
Asides from increased costs of living and lack of support, I think there is also a cultural element to this. Perhaps this is what the pope is also alluding to? I think there has been a huge shift in values for most Europeans and western nations. Individualism taken to an extreme level. And at the same time the role of motherhood has been denigrated and is portrayed so negatively. Even if someone does have the income, they would rather spend it on extra holidays or other luxuries, rather than bring another child into the world. That is where the preference of the average European lies. As it stands the birth rate is below replacement level in most European countries.
I have felt for some time that parenthood and having children just isn't aspirational anymore for most young people now.
I also think that once a culture adjusts to smaller family sizes, everyone gets used to it and its hard to imagine anything different. We often hear of our grandparents generation when it was normal to have 4-6 kids. That is pretty much unthinkable now. I think China is having a similar problem due to having previously implemented the one child policy. I mean if you and everyone you know has grown up without siblings in a one child family, it must feel strange to now think of having 2 or 3 children.