Aging and real estate prices in Germany

Philipp Breidenbach, Philipp Jäger and Lisa Taruttis

No 953, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Exploiting regional heterogeneity in population dynamics across more than 10,000 municipalities in Germany, we provide robust empirical evidence that population aging depresses real estate prices and rents. Using millions of individual real estate offers and detailed demographic data on the municipality level, we estimate that average sales prices in 2020 would have been up to 12% higher, if the population age distribution had been the same as in 2008. We show that population aging does not only reduce prices but also increases the availability of real estate. Moreover, we document substantial heterogeneity in price responses by dwelling type, real estate characteristics and urban-rural status which suggest that a lower demand for living space and live-cycle dissaving are driving our results. We predict that population aging will continue to put downward pressure on real estate prices and exacerbate regional disparities in Germany.

Keywords: Real estate prices; population aging; Germany (search for similar items in EconPapers)
JEL-codes: J11 R21 R31 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-age, nep-eur, nep-geo and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:953

DOI: 10.4419/96973117

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