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

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  • Andrew Coleman

Abstract

type="main" xml:id="ecor12080-abs-0001"> This article 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 generally leads to declining home ownership rates among young people, with bigger declines if the government increases taxes and pensions rather than relying on additional private provision of retirement income. The model suggests raising tax rates to provide pensions can reduce the welfare of all agents, even those who are net beneficiaries, because they tighten credit constraints on young people.

Suggested Citation

  • Andrew Coleman, 2014. "Squeezed in and squeezed out: the effects of population ageing on the demand for housing," The Economic Record, The Economic Society of Australia, vol. 90(290), pages 301-315, September.
    • Handle: RePEc:bla:ecorec:v:90:y:2014:i:290:p:301-315
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    File URL: http://hdl.handle.net/10.1111/ecor.2014.90.issue-290
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    Cited by:

    1. Andrew Coleman, 2017. "Housing, the ‘Great Income Tax Experiment’, and the intergenerational consequences of the lease," Working Papers 17_09, Motu Economic and Public Policy Research.
    2. Katarzyna Maj-Waśniowska & Tomasz Jedynak, 2020. "The Issues and Challenges of Local Government Units in the Era of Population Ageing," Administrative Sciences, MDPI, vol. 10(2), pages 1-23, June.
    3. Creina Day, 2018. "Australia's Growth in Households and House Prices," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(4), pages 502-511, December.
    4. Andrew Coleman, 2017. "Housing, the ‘Great Income Tax Experiment’, and the intergenerational consequences of the lease," Working Papers 1709, University of Otago, Department of Economics, revised Apr 2017.
    5. Andrew Coleman & Özer Karagedikli, 2018. "Residential construction and population growth in New Zealand: 1996-2016," Reserve Bank of New Zealand Discussion Paper Series DP2018/02, Reserve Bank of New Zealand.
    6. Day, Creina, 2019. "House prices post-GFC: More household debt for longer," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 91-102.

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