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

Yu Chen, Kenneth Gibb, Chris Leishman, Robert Wright

Research output: Working paperDiscussion paper

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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
Original languageEnglish
Place of PublicationGlasgow
PublisherUniversity of Strathclyde
Number of pages26
Publication statusPublished - Jun 2012

Publication series

NameStrathclyde Discussion Papers in Economics
PublisherUniversity of Strathclyde
No.12-07

Keywords

  • impact
  • population ageing
  • house prices
  • micro-simulation approach

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  • Cite this

    Chen, Y., Gibb, K., Leishman, C., & Wright, R. (2012). The Impact of Population Ageing on House Prices: A Micro-simulation Approach. (Strathclyde Discussion Papers in Economics; No. 12-07). Glasgow: University of Strathclyde.