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Ageing and asset prices

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  • Elod Takats

Abstract

The paper investigates how ageing will affect asset prices. A small model is used to show that economic and demographic factors drive asset, and in particular house, prices. These factors are estimated in a panel regression framework encompassing BIS real house price data from 22 advanced economies between 1970 and 2009. The estimates show that demographic factors affect real house prices significantly. Combining the results with UN population projections suggests that ageing will lower real house prices substantially over the next forty years. The headwind is around 80 basis points per annum in the United States and much stronger in Europe and Japan. Based on the analysis, global asset prices are likely to face substantial headwinds from ageing.

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  • Elod Takats, 2010. "Ageing and asset prices," BIS Working Papers 318, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:318
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    References listed on IDEAS

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    Cited by:

    1. Gevorgyan, Kristine, 2019. "Do demographic changes affect house prices?," Journal of Demographic Economics, Cambridge University Press, vol. 85(4), pages 305-320, December.
    2. Ye Jin Heo, 2018. "Population aging and housing prices: who are we calling old?," NBP Working Papers 288, Narodowy Bank Polski.
    3. Benoit Mojon & Xavier Ragot, 2020. "Can an ageing workforce explain low inflation?," BIS Papers chapters, in: Bank for International Settlements (ed.), Inflation dynamics in Asia and the Pacific, volume 111, pages 73-79, Bank for International Settlements.
    4. Ronny Mazzocchi, 2013. "Monetary Policy when the NAIRI is unknown: The Fed and the Great Deviation," DEM Discussion Papers 2013/16, Department of Economics and Management.
    5. Thammarak Moenjak & Kengjai Watjanapukka & Oramone Chantapant & Teeravit Pobsukhirun, 2010. "New Globalization: Risks and Opportunities for Thailand in the Next Decade," Working Papers 2010-04, Monetary Policy Group, Bank of Thailand.
    6. David A. Dodge & Richard Dion, 2011. "Chronic Healthcare Spending Disease: A Macro Diagnosis and Prognosis," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 327, April.
    7. July Radev, 2017. "Monetary policy and the dynamic disequilibrium," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 96-114.
    8. Bo Malmberg, 2012. "Fertility Cycles, Age Structure and Housing Demand," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(5), pages 467-482, November.

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    ageing; asset prices; house prices;
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