How do changes in the age structure of the population impact housing markets? This paper uses centuries of data to show that demographic changes are a key determinant of house prices.The writers find that a one percentage point increase in the current five-year birth rate predicts house price increases of 4% about 25 years later and reduces prices by the same amount when this cohort retires and passes away. By linking the age of individuals to their housing consumption, transactions, and investment portfolios, they show these changes are primarily driven by the age-dependent demand for housing as an investment asset.
- Marc Francke, University of Amsterdam - Faculty of Economics and Business and Ortec Finance
- Matthijs Korevaar, Erasmus School of Economics