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Demographics, house prices and mortgage design

Author

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  • Miles, David

    () (Monetary Policy Committee Unit, Bank of England)

Abstract

This paper develops a model of the housing market that takes account of population density to assess the impact of population changes on the value and size of the housing stock. The model implies that if population density is on an upward trajectory, rises in population and in incomes increasingly generate price responses and diminishing rises in the stock of housing. This has implications for the optimal structure of housing finance. It amkes equity financing of home purchase more desirable. The properties of hybrid debt-equity contracts for financing house purchase are explored.

Suggested Citation

  • Miles, David, 2012. "Demographics, house prices and mortgage design," Discussion Papers 35, Monetary Policy Committee Unit, Bank of England.
  • Handle: RePEc:mpc:wpaper:0035
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    File URL: https://www.bankofengland.co.uk/-/media/boe/files/external-mpc-discussion-paper/2012/demographics-house-prices-and-mortgage-design
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    1. repec:erc:cypepr:v:11:y:2017:i:1:p:69-82 is not listed on IDEAS

    More about this item

    Keywords

    demographics; house prices; mortgage design; population density; housing; debt-equity; equity financing;

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R34 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Input Demand Analysis

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