TY - UNPB
T1 - Baby Booms and Asset Booms
T2 - Demographic Change and the Housing Market
AU - Francke, Marc K.
AU - Korevaar, Matthijs
PY - 2022/10
Y1 - 2022/10
N2 - How do demographic changes affect asset prices? Based on centuries of data, this paper shows that demographic changes are a key and predictable determinant of house prices. A one percentage point increase in the current birth rate increases house prices about 25-30 years later by 4 to 5%. Using individual data on housing decisions, transactions and portfolios we argue this is driven by strongly age-dependent demand for home-ownership and the limited response of investors to such shocks. Correspondingly, we find large impacts of past birth rates on rent-price ratios, but negligible impacts on rent prices, bond yields, and dividend yields.
AB - How do demographic changes affect asset prices? Based on centuries of data, this paper shows that demographic changes are a key and predictable determinant of house prices. A one percentage point increase in the current birth rate increases house prices about 25-30 years later by 4 to 5%. Using individual data on housing decisions, transactions and portfolios we argue this is driven by strongly age-dependent demand for home-ownership and the limited response of investors to such shocks. Correspondingly, we find large impacts of past birth rates on rent-price ratios, but negligible impacts on rent prices, bond yields, and dividend yields.
U2 - 10.2139/ssrn.3368036
DO - 10.2139/ssrn.3368036
M3 - Preprint
BT - Baby Booms and Asset Booms
ER -