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Effect of ageing on housing prices: A perspective from an overlapping generation model

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  • Sun, Tianyu
  • Chand, Satish
  • Sharpe, Keiran

Abstract

This paper suggests that ageing has divergent effects on housing prices, and the divergence sources from both aspects of ageing and housing. For the ageing, a fall in fertility and a rise in survival rate could have opposite effects on housing prices. For the housing, the prices of the two components – land and structure – respond to fertility rate decline and survival rate increase to different extent. Therefore, the effect of ageing on housing prices does not have a definite pattern in the long run. In the short run, the results suggest that ageing can produce a turning point in the price dynamics. To the left of the peak, ageing boosts prices while to the right, it has the opposite effect, therefore the impacts of ageing on housing prices are different with time.

Suggested Citation

  • Sun, Tianyu & Chand, Satish & Sharpe, Keiran, 2024. "Effect of ageing on housing prices: A perspective from an overlapping generation model," Research in Economics, Elsevier, vol. 78(3).
    • Handle: RePEc:eee:reecon:v:78:y:2024:i:3:s1090944324000243
    DOI: 10.1016/j.rie.2024.100960
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    More about this item

    Keywords

    Ageing population; OLG model; House prices; Land prices; Turning point;
    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
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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