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Do Demographic Changes Affect House Prices

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  • Kristine GEVORGYAN

    (University of Economics, Prague)

Abstract

The paper tests the idea that major demographic shifts can affect housing prices. We first build an overlapping generation model and analytically solve for the equilibrium price of the asset. The model predicts that economies with a higher fraction of old people in the overall population have lower house prices. We empirically test this hypothesis using data on house prices and demographic variables from the Organization for Economic Co-operation and Development (OECD). We find that if population growth increases by one percentage point, house price growth increases by 1.4 percentage points.

Suggested Citation

  • Kristine GEVORGYAN, 2019. "Do Demographic Changes Affect House Prices," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 85(4), pages 305-320, December.
    • Handle: RePEc:ctl:louvde:v:85:y:2019:i:4:p:305-320
    DOI: 10.1017/dem.2019.9
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    References listed on IDEAS

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    1. Dan Andrews, 2010. "Real House Prices in OECD Countries: The Role of Demand Shocks and Structural and Policy Factors," OECD Economics Department Working Papers 831, OECD Publishing.
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    6. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66(6), pages 467-467.
    7. Gustman, Alan L. & Steinmeier, Thomas L., 1999. "Effects of pensions on savings: analysis with data from the health and retirement study," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 50(1), pages 271-324, June.
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    9. Louise Sheiner & David N. Weil, 1992. "The Housing Wealth of the Aged," NBER Working Papers 4115, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Jiří Pour, . "Ceny nemovitostí a dlouhodobé úrokové sazby [House prices and long-term interest rates]," Politická ekonomie, Prague University of Economics and Business, vol. 0.
    2. Jiří Pour, 2023. "Ceny nemovitostí a dlouhodobé úrokové sazby [House prices and long-term interest rates]," Politická ekonomie, Prague University of Economics and Business, vol. 2023(6), pages 668-708.
    3. Cheng-Hong Yang & Borcy Lee & Yu-Da Lin, 2022. "Effect of Money Supply, Population, and Rent on Real Estate: A Clustering Analysis in Taiwan," Mathematics, MDPI, vol. 10(7), pages 1-17, April.

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    More about this item

    Keywords

    Aging population; Demographics; House prices;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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