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

Author

Listed:
  • Yu Chen

    (School of Social and Political Sciences, University of Glasgow)

  • Kenneth Gibb

    (School of Social and Political Sciences, University of Glasgow)

  • Chris Leishman

    (Heriot-Watt University)

  • Robert Wright

    (Department of Economics, 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

  • Yu Chen & Kenneth Gibb & Chris Leishman & Robert Wright, 2012. "The Impact of Population Ageing on House Prices: A Micro-simulation Approach," Working Papers 1207, University of Strathclyde Business School, Department of Economics.
    • Handle: RePEc:str:wpaper:1207
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    Cited by:

    1. Creina Day, 2018. "Population and house prices in the United Kingdom," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(2), pages 127-141, May.
    2. 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.
    3. Nicholas Apergis, 2020. "Natural Disasters and Housing Prices: Fresh Evidence from a Global Country Sample," International Real Estate Review, Global Social Science Institute, vol. 23(2), pages 189-210.
    4. Yihua Wang & Tomoko Kinugasa, 2022. "The relationship between demographic change and house price: Chinese evidence," International Journal of Economic Policy Studies, Springer, vol. 16(1), pages 43-65, February.
    5. Shihong Zeng & Xinwei Zhang & Xiaowei Wang & Guowang Zeng, 2019. "Population Aging, Household Savings and Asset Prices: A Study Based on Urban Commercial Housing Prices," Sustainability, MDPI, vol. 11(11), pages 1-21, June.
    6. Heo, Ye Jin, 2022. "Population aging and house prices: Who are we calling old?," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    7. Nicholas Apergis, 2020. "Natural Disasters and Housing Prices: Fresh Evidence from a Global Country Sample," International Real Estate Review, Global Social Science Institute, vol. 23(2), pages 815-836.

    More about this item

    Keywords

    Population ageing; house prices; micro-simulation;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • 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

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