Off course. Even if this engine where better than decima, decima is made for specific hardware unlike unreal. It should be more optimised if nothing else than unreal and the devs would have acces to it while still being developed so they would have been able to still make games while the engine is being tuned. 

That's because the mid-gen consoles were supposed to be 4k consoles, not next gen consoles. If everything goes native 4k, we would practically be playing the same games we're getting now as native 4k is just way too resource heavy. 1440p and/or checkerboard rendering makes much more sense and they can put all that resources into boosting overall visual fidelity.  

That Demo is just a glimpse of what we will see on PS5. The best Sony Games from ND, GG, SM, etc will make this Demo looking very sad in comparison, mark my words.
Everybody will smile coming back to this Thread, once we see what PS5 is really capable of. And I cannot wait :)

It seems some people miss the title of what the OP asked. Will we see a release game in the PS5 first year on the same level as the UE5 demo. I have no doubt we will see Sony first party studios surpass that demo but in the first year of the console release well, I just doubt it. We will probably see some hype trailers but will we see release dates within the year of the console release, this is what I am doubting.

For the UE5 demo, thinking about it, it took 6 months to create and it really has nothing in it. What I mean by that its not a fully developed game but basically a walking simulator. I would be surprised if we see anything on that order within the first year unless its some very basic type of game. A fighting game comes to mind but nothing on the order of Horizon 2 but I am willing to be surprised.

Honestly just looking at that I can't tell what about that is better than current gen. I don't doubt it is better than current gen, but if you told me that was running on a PS4 or Xbox One I wouldn't question it for a second. Generation jumps are getting much smaller and since graphics are already hyper realistic current gen it really doesn't make much of a difference other than for people who are obsessed with minute graphical improvements. Seems like the most obvious showcase of next gen looking significantly better is when a scene has a lot of lighting effects that use ray tracing. This scene here kinda just looks like a current gen game set on high settings.

Your post reminds me of when people were calling BS on the Uncharted 2006 E3 trailer and the final game ended up looking much better.

https://www.youtube.com/watch?v=MLEWcoaHbMw

As for framerate and resolution, the UE5 PS5 demo was running at 1440p30 so I expect you to be horribly wrong.

What looks betters, Halo 5 running at 4k on Xbox One X or the Unreal Engine 5 demo running at 1440p on PS5? ;)

There you have your answer. Xbox One X runs an Xbox One games at 4k, but it wouldn't be able to produce the PS5 tech demo. Ultimately developers have to choose where they put the consoles power. Without direct comparison, most people wouldn't be able to tell with the naked eye whether they're looking at a (Good) upscaled 4k (from 1440p) or a native 4k. Especially if we're talking about TVs and not computer moniters.

We will for sure see plenty of native 4k PS5/Xbox One games, but they won't be the most graphically impressive. Once the gen hits its stride I think we will see 1440(PS5) 1800p (XSX) as common targets. As upscalling gets better I'm sure more devs will more boldly go to 1080p to achieve stunning next gen visuals at 60fps.

Tbh it was disappointing the demo ran at 30. 60 would have been ideal and if a tech demo can’t pull that off the future didn’t seem so impressive. 

We are at that point in the 8th gen where developers are relying on baked, static details to improve visuals.
It makes their games seem more "visually impressive" than what they technically are.

We saw the same issue with the 7th gen.
Games like Call of Duty 3 started to employ dynamic particle effects and shadowing... But move towards the end of the generation, everything was baked and static like with Halo 4, Uncharted and so forth.

But when developers started to prioritize the 8th gen console development and ported their games back to 7th gen, they didn't go back and bake those details in... So games like Dragon Age: Inquisition, Call of Duty: Black Ops 3 was seen like a graphics regression when on a technical level they weren't, they just didn't have baked lighting and shadowing details.

Conversely, history is about to repeat itself, developers will start prioritizing 9th gen hardware with a ton of dynamic effects, so we may see some visual regressions with backported multiplats on 8th gen.

Not because of lack of optimization, but because of the lack of baked details.

Well, to be fair that demo featured only one girl walking in a cave. If they had had 10 more characters on screen shooting explosives at her, while she used some psychic powers on them ala Control, I'm inclined to think that would have made the demo more complex, and therefore more representative of what is actually going to be on a game using that engine. Not to mention the fact that they did not use any foliage or reflective surfaces whatsoever.