I don't think we can take small samples of one or two Shows as an overall marker of how the hobby is going - especially 'depressing' local ones...

At the Stafford Guildex show last Saturday, yes the majority of visitors were older/retired, but my mate is about 21 & I saw some youngsters (maybe early teens) there too. As for layouts & traders, I'd guess the MIOG layout and stand were mostly 30-ish, Ellis Clark & his team around the same, and very enthusiastic, and other operators were certainly say, mid-50s. I joke that O Scale is known as the Senior Scale, but by no means at all was everyone there on the verge of popping their clogs!! - and yes I'm fully aware that's not what 'senior scale' is meant to refer to.

As for enthusiasm for real railways, my wife & I go the Pub at Bridgnorth station quite often, and one weekend evening a few months ago it was the Diesel Gala. My wife commented on how many young lads (as in late-teens to 30-ish) there were. As many of the diesels were withdrawn before a lot of them were even born, I thought this was very interesting - where has their enthusiasm come from?
These again are just two limited examples, which cannot by themselves prove how the hobby is doing, but I see more to be optimistic about than pessimistic.
I have said before that if the hobby was dying out, the Warley Show would now be held in a shed at the back of the Harry Mitchell leisure centre in Smethwick, where they started out, rather than moving to the NEC, circa 1992 I think?
maybe we are talking about two quite distinct hobbies here. The first being building a model railway AND the locos and stock that go on it. The second being building a model railway and populating it with RTR items.
Is there no middle ground at all?? I don't think there is quite such a clear-cut division.
In my own case, yes much of my stuff is R-T-R, but equally much of it I have worked on, detailed & repainted, to make it my 'own'. People could look, for example, at one of my F-Units, and if they're familiar with the old Atlas/Roco F9, think it's just another one of those.
It isn't. It has had several changes made to make it an F7, including re-locating a bodyside porthole window, and more details added - most of which I made myself - to make it a Soo Line F7. But if I was supposed to build the entire thing completely from scratch, it just would never exist, for a number of reasons, time - or the lack of - being just one of them.