I Squeezed in and squeezed out: the effects of population ageing on the demand for housing

Andrew Coleman ()
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Andrew Coleman: Motu Economic and Public Policy Research

No 10_01, Working Papers from Motu Economic and Public Policy Research

Abstract: This paper examines how increasing longevity affects the housing choices of working age and retired people using a heterogeneous agent overlapping generations model that incorporates owner-occupier and rental sectors, credit constraints, detailed tax regulations, and a housing supply sector. Increasing longevity is predicted to increase the fraction of older households living in large houses, and reduce home ownership rates among young people, who are squeezed out of the housing market because of higher taxes and house prices. The model suggests raising tax rates to provide pensions rather than relying on private provision can reduce the welfare of all agents, even those who are net beneficiaries over a lifetime, because they tighten credit constraints on agents when they are young.

Keywords: Population ageing; tax policy; housing markets; home ownership rates; overlapping generation models; credit constraints. (search for similar items in EconPapers)
JEL-codes: H55 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2010-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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