Population Aging and Housing Consumption: A Nonlinear Relationship in China

Abstract

Mass migration of rural workers to cities will inevitably increase urban housing demand. However, the scale of vacant urban housing will increase in future as a result of the population aging and the rising number of empty nesters. Therefore, demographic transition may not only increase housing demand, but also increase housing supply. Using an overlapping generations model, the present paper investigates the impact of demographic transition on housing consumption. We find that there is a nonlinear relationship between the elderly dependency ratio and housing consumption in China. With the deepening of population aging, housing consumption will increase; when the elderly dependency ratio reaches a turning point, housing consumption will decrease. The turning point of the nonlinear curve also depends on population mobility. A greater degree of population mobility will result in a delayed turning point. Furthermore, the turning point of the nonlinear curve will emerge when China's elderly dependency ratio reaches a value of 32 percent in 2025. This means that over the next decade, China should continue to increase the level of housing supply.

Population Aging, Household Savings and Asset Prices: A Study Based on Urban Commercial Housing Prices

“…In demographics, the indicators that measure the degree of aging of a country's population are (1) the coefficient of old age, which refers to the elderly population as a percentage of the total population; (2) the population dependency ratio, also known as the burden factor, which refers to the percentages of non working-age population and working-age population in the population and can be subdivided into the child dependency ratio and the elderly dependency ratio; and (3) the ratio of elderly to children. The selection of explanatory variables for population aging is based on existing research [26]; population aging is expressed by the population dependency ratio, the child dependency ratio and the elderly dependency ratio. Residents' savings are expressed by the year-end balance of the savings of urban and rural residents.…”

“…There is also the real housing price index adopted by Takáts [17]. At the micro level, housing price is more indirectly expressed by household housing demand, for example, the number of housing units owned by families, the average housing area as used by Li and Shen [26], and the housing value as used by Han [46]. Due to the limitations of the data in this paper, it is difficult to measure the above indicators, such as the rising rate of housing prices and the ratio of housing prices.…”

“…Because the dataset is a short panel data model (time series data sample T = 2, cross-sectional data sample N = 257, T < N), the probability of pseudoregression is much smaller than that of the time series. Based on the process of building a panel data model used in the literature (such as [18,26]), this chapter does not conduct a unit root test on the variables. The choice of the pooled estimation model and the fixed effect model can be judged by the F-test.…”

“…There are also studies that indicate that population aging will not lead to a decline in asset prices in the short term but that the effect will reverse in the long run with the aggravation of aging to ultimately demonstrate an inverted U-shaped relationship. Li and Shen [26] use 1997-2007 panel data for China to draw a relationship between population aging and housing prices. With the increasing elderly dependency ratio, housing consumption first increases and then decreases, eventually leading to a decline in housing prices.…”

Ageing Impact on the Economy and Emissions in China: A Global Computable General Equilibrium Analysis

“…The impact of ageing in China has been studied from various aspects such as the economic impact of pension reform options in China [5,6]; the ageing impact on economic growth through influence in labor market [7][8][9][10][11][12][13]; the population ageing impact on poverty and income inequality [14,15]; and the ageing impact on household consumption [16,17]. These studies focus on the ageing impact in China while the interplay between China and other countries is largely overlooked.…”