Effect of aging on housing prices: evidence from a panel data

Tianyu Sun, Satish Chand and Keiran Sharpe

MPRA Paper from University Library of Munich, Germany

Abstract: We empirically test the effect of ageing on housing prices. Our analysis shows that a decline in the fertility rate and an increase in longevity – the two main causes of an ageing population – have divergent effects on housing prices. This empirical finding helps us to reconcile a conflict which has lasted for 30 years in literature. We show that a decline in the fertility rate generally lowers housing prices because there are fewer workers in the population. At the same time, the workers and retirees react differently towards the impact of longer lifespans. In particular, the workers are urged to purchase more houses as a form of of saving and thus raise the prices, while the retirees tend to sell a greater fraction of the housing for extra funding. The conclusions correspond well with the Life Cycle Hypothesis and are drawn by using a semi-parametric method on an international panel data.

Keywords: Ageing; Fertility; Longevity; Housing prices; Semi-parametric analysis (search for similar items in EconPapers)
JEL-codes: C14 E31 J11 R21 (search for similar items in EconPapers)
Date: 2018-11-01, Revised 2019-03-01
New Economics Papers: this item is included in nep-age, nep-dem, nep-mac and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:94418

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