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The Impact of Population Ageing on House Prices: A Micro-simulation Approach

Author

Listed:
  • Chen, Yu

    () (University of Glasgow)

  • Gibb, Kenneth D.

    () (University of Glasgow)

  • Leishman, Chris

    () (Heriot-Watt University, Edinburgh)

  • Wright, Robert E.

    () (University of Strathclyde)

Abstract

This paper attempts to estimate the impact of population ageing on house prices. There is considerable debate about whether population ageing puts downwards or upwards pressure on house prices. The empirical approach differs from earlier studies of this relationship, which are mainly regression analyses of macro time-series data. A micro-simulation methodology is adopted that combines a macro-level house price model with a micro-level household formation model. The case study is Scotland, a country that is expected to age rapidly in the future. The parameters of the household formation model are estimated with panel data from the British Household Panel Survey covering the period 1999-2008. The estimates are then used to carry out a set of simulations. The simulations are based on a set of population projections that represent a considerable range in the rate of population ageing. The main finding from the simulations is that population ageing – or more generally changes in age structure – is not likely a main determinant of house prices, at least in Scotland.

Suggested Citation

  • Chen, Yu & Gibb, Kenneth D. & Leishman, Chris & Wright, Robert E., 2012. "The Impact of Population Ageing on House Prices: A Micro-simulation Approach," IZA Discussion Papers 6668, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6668
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    Cited by:

    1. Renuga Nagarajan & Aurora A.C. Teixeira & Sandra T. Silva, 2013. "The impact of an ageing population on economic growth: an exploratory review of the main mechanisms," FEP Working Papers 504, Universidade do Porto, Faculdade de Economia do Porto.

    More about this item

    Keywords

    population ageing; house prices; Scotland;

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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