Aging and Urban House Prices
32 Pages Posted: 28 Apr 2015
Date Written: March 23, 2015
Abstract
This paper investigates the long-run relationships between the size and age composition of a city's population and the price of local housing. For estimation purposes, we combine city-level demographic information with housing price data for 87 cities in Germany over the period 1995-2012. Employing a panel error correction framework that accounts for the evolution of city income and other controls, we find that urban house prices perform stronger in cities that grow or age less rapidly. A combination of the empirical estimates with current population projections suggests that population aging will exert considerable downward pressure on urban house prices in upcoming years.
Keywords: Urban house prices, demographic change, Germany
JEL Classification: G12, J11, R31
Suggested Citation: Suggested Citation