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Aging and Property Prices: A Theory of Very Long Run Portfolio Choice and Its Predictions on Japanese Municipalities in the 2040s

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  • Tamai, Yoshihiro
  • Shimizu, Chihiro
  • Nishimura, Kiyohiko G.

Abstract

This paper investigates the effect of aging population on property (land) prices. A theory of very long run portfolio choice is developed for a transition economy from young and growing to rapidly aging population and applied to estimate property price inflation in Japanese municipal markets. The results are stunning. The simulation results in which income factors are assumed to be fixed at the 2005-2010 growth level suggest that the average residential property price (land price) in the Japanese municipalities may decrease as much as 19 percent from the present to 2020, 24 percent to 2030, and 32 percent to 2040.

Suggested Citation

  • Tamai, Yoshihiro & Shimizu, Chihiro & Nishimura, Kiyohiko G., 2017. "Aging and Property Prices: A Theory of Very Long Run Portfolio Choice and Its Predictions on Japanese Municipalities in the 2040s," HIT-REFINED Working Paper Series 65, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:remfce:65
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    References listed on IDEAS

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    Cited by:

    1. Suzuki, Masatomo & Asami, Yasushi & Shimizu, Chihiro, 2021. "Housing rent rigidity under downward pressure: Unit-level longitudinal evidence from Tokyo," Journal of Housing Economics, Elsevier, vol. 52(C).
    2. Masahiro Higo & Kiyohiko G. Nishimura & Yukie Sakuragawa, 2020. "Reforms and Crises in Government Statistics: The Case of Japan," Asian Economic Papers, MIT Press, vol. 19(2), pages 21-37, Summer.

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    More about this item

    Keywords

    Aging; Asset Prices; Long Run Portfolio Choice; Constant Monetary Quantity (CMQ); Inflation Target (IT); Price Stability;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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