The Impact of Population Ageing on House Prices: A Micro-simulation Approach

Yu Chen (), Kenneth D. Gibb (), Chris Leishman () and Robert Wright ()
Additional contact information
Yu Chen: University of Glasgow
Kenneth D. Gibb: University of Glasgow
Chris Leishman: Heriot-Watt University, Edinburgh

No 6668, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper attempts to estimate the impact of population ageing on house prices. There is considerable debate about whether population ageing puts downwards or upwards pressure on house prices. The empirical approach differs from earlier studies of this relationship, which are mainly regression analyses of macro time-series data. A micro-simulation methodology is adopted that combines a macro-level house price model with a micro-level household formation model. The case study is Scotland, a country that is expected to age rapidly in the future. The parameters of the household formation model are estimated with panel data from the British Household Panel Survey covering the period 1999-2008. The estimates are then used to carry out a set of simulations. The simulations are based on a set of population projections that represent a considerable range in the rate of population ageing. The main finding from the simulations is that population ageing – or more generally changes in age structure – is not likely a main determinant of house prices, at least in Scotland.

Keywords: house prices; population ageing; Scotland (search for similar items in EconPapers)
JEL-codes: J1 R2 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2012-06
New Economics Papers: this item is included in nep-age, nep-cmp, nep-dem and nep-ure
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Citations: View citations in EconPapers (9)

Published - published in: Scottish Journal of Political Economy, 2012, 59 (5), 523 - 542

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