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The Impact of Population Ageing on House Prices: A Micro‐simulation Approach
Author(s) -
Chen Yu,
Gibb Kenneth,
Leishman Chris,
Wright Robert
Publication year - 2012
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/j.1467-9485.2012.00593.x
Subject(s) - economics , econometrics , population ageing , macro , house price , population , panel data , range (aeronautics) , ageing , regression analysis , british household panel survey , demographic economics , working population , set (abstract data type) , statistics , demography , mathematics , computer science , engineering , sociology , biology , genetics , programming language , aerospace engineering
Abstract This study 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.