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Population Ageing and House Prices in Australia


  • Ross Guest
  • Robyn Swift


"This article assesses the effect of population ageing on housing consumption and house prices. Using two approaches, this article finds that the ageing of the population may cause average real house prices to be between 3 and 27 per cent lower than they otherwise would be over the period 2008-2050. The first approach is an econometric estimation of house prices for Australia over the period 1980-2008. The second approach is a simulation of a life cycle-optimising model with representative overlapping generations." Copyright (c)2010 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.

Suggested Citation

  • Ross Guest & Robyn Swift, 2010. "Population Ageing and House Prices in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(3), pages 240-253.
  • Handle: RePEc:bla:ausecr:v:43:y:2010:i:3:p:240-253

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    References listed on IDEAS

    1. Walter Perrin Heller & Ross M. Starr, 1979. "Capital Market Imperfection, the Consumption Function, and the Effectiveness of Fiscal Policy," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 455-463.
    2. Attanasio, Orazio P & Browning, Martin, 1995. "Consumption over the Life Cycle and over the Business Cycle," American Economic Review, American Economic Association, vol. 85(5), pages 1118-1137, December.
    3. Mankiw, N. Gregory & Weil, David N., 1989. "The baby boom, the baby bust, and the housing market," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 235-258, May.
    4. James M. Poterba, 2001. "Demographic Structure And Asset Returns," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 565-584, November.
    5. James M. Poterba, 2004. "The impact of population aging on financial markets," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 163-216.
    6. Michael Hurd & Susann Rohwedder, 2003. "The Retirement-Consumption Puzzle: Anticipated and Actual Declines in Spending at Retirement," NBER Working Papers 9586, National Bureau of Economic Research, Inc.
    7. James M. Poterba, 1984. "Tax Subsidies to Owner-Occupied Housing: An Asset-Market Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 99(4), pages 729-752.
    8. Miles, David, 1992. "Housing markets, consumption and financial liberalisation in the major economies," European Economic Review, Elsevier, vol. 36(5), pages 1093-1127, June.
    9. James Alm & James R. Follain Jr., 1982. "Alternative Mortgage Instruments: Their Effects On Consumer Housing Choices in an Inflationary Environment," Public Finance Review, , vol. 10(2), pages 134-157, April.
    10. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
    11. Michael D. Hurd & Susann Rohwedder, 2002. "The Retirement-Consumption Puzzle Anticipated and Actual Declines in Spending at Retirement," Working Papers DRU-3009, RAND Corporation.
    12. Christopher D. Carroll, 1992. "The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 61-156.
    13. Ross S. Guest, 2005. "A Life Cycle Analysis of Housing Affordability Options for First Home Owner-Occupiers in Australia," The Economic Record, The Economic Society of Australia, vol. 81(254), pages 237-248, September.
    14. Joel Slemrod, 1982. "Down-Payment Constraints: Tax Policy Effects in a Growing Economy With Rental and Owner-Occupied Housing," Public Finance Review, , vol. 10(2), pages 193-217, April.
    15. Glenn Otto, 2007. "The Growth of House Prices in Australian Capital Cities: What Do Economic Fundamentals Explain?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 40(3), pages 225-238, September.
    16. Hayashi, Fumio & Ito, Takatoshi & Slemrod, Joel, 1988. "Housing finance imperfections, taxation, and private saving: A comparative simulation analysis of the United States and Japan," Journal of the Japanese and International Economies, Elsevier, vol. 2(3), pages 215-238, September.
    17. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501, June.
    18. Artle, Roland & Varaiya, Pravin, 1978. "Life cycle consumption and homeownership," Journal of Economic Theory, Elsevier, vol. 18(1), pages 38-58, June.
    19. Peter Abelson & Roselyne Joyeux & George Milunovich & Demi Chung, 2005. "Explaining House Prices in Australia: 1970-2003," The Economic Record, The Economic Society of Australia, vol. 81(s1), pages 96-103, August.
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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. How Australia's ageing population could push house prices down
      by Ross Guest, Professor of Economics and National Senior Teaching Fellow at Griffith University in The Conversation on 2014-02-07 01:51:42

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