Population Aging, Household Savings and Asset Prices: A Study Based on Urban Commercial Housing Prices
Abstract
:1. Introduction
1.1. The Impact of Population Aging on Asset Prices
1.2. The Relationship between Household Savings and Asset Prices
1.3. The Contribution of This Paper
2. Theoretical Model
2.1. Life-Cycle Theory
2.2. The Overlapping Generations Model
3. Empirical Models and Data Sources
3.1. Econometric Model Setting
3.2. Data Sources and Processing
4. The Empirical Results and Robustness Test
4.1. Model Test
4.2. National-Level Pooled Regression Estimation Results and Discussion
4.3. Robustness Test
4.4. The Impact Mechanism of Population Aging on Housing Prices
4.4.1. Interaction Analysis
4.4.2. Mediating Effect
5. Conclusions and Implications
Author Contributions
Funding
Acknowledgments
Conflicts of Interest
Appendix A. Reasoning behind the Overlapping Generations Model
Appendix A.1. Population Structure
Appendix A.2. Enterprise Behavior
Appendix A.3. Individual Behavior
Appendix A.4. Market Clearing and Equilibrium Analysis
Appendix A.5. Static Comparative Analysis
References
- Hashimoto, H.; Horiguchi, H.; Matsuda, S. Micro data analysis of medical and long-term care utilization among the elderly in Japan. Int. J. Environ. Res. Public Health 2010, 7, 3022–3037. [Google Scholar] [CrossRef] [PubMed]
- Tchoe, B.; Nam, S.-H. Aging risk and health care expenditure in Korea. Int. J. Environ. Res. Public Health 2010, 7, 3235–3254. [Google Scholar] [CrossRef] [PubMed]
- Woo, J. How can we achieve healthy aging? Int. J. Environ. Res. Public Health 2017, 14, 1583. [Google Scholar] [CrossRef] [PubMed]
- Reynaud, C.; Miccoli, S. Depopulation and the aging population: The relationship in Italian municipalities. Sustainability 2018, 10, 1004. [Google Scholar] [CrossRef]
- Chica-Olmo, J.; Cano-Guervos, R.; Chica-Rivas, M. Estimation of housing price variations using spatio-temporal data. Sustainability 2019, 11, 1551. [Google Scholar] [CrossRef]
- Forte, F.; Antoniucci, V.; de Paola, P. Immigration and the housing market: The case of castel volturno, in Campania Region, Italy. Sustainability 2018, 10, 343. [Google Scholar] [CrossRef]
- Kim, D.; Jin, J. The effect of land use on housing price and rent: Empirical evidence of job accessibility and mixed land use. Sustainability 2019, 11, 938. [Google Scholar] [CrossRef]
- Poterba, J.M. Demographic structure and asset returns. Rev. Econ. Stat. 2001, 83, 565–584. [Google Scholar] [CrossRef]
- Abel, A.B. Will bequests attenuate the predicted meltdown in stock prices when baby boomers retire? Rev. Econ. Stat. 2001, 83, 589–595. [Google Scholar] [CrossRef]
- Bakshi, G.S.; Chen, Z. Baby boom, population aging, and capital markets. J. Bus. 1994, 67, 165–202. [Google Scholar] [CrossRef]
- Brooks, R. Asset-market effects of the baby boom and social-security reform. Am. Econ. Rev. 2002, 92, 402–406. [Google Scholar] [CrossRef]
- Geanakoplos, J.; Magill, M.; Quinzii, M. Demography and the long-run predictability of the stock market. Brook. Pap. Econ. Act. 2004, 2004, 241–325. [Google Scholar] [CrossRef]
- Levin, E.; Montagnoli, A.; Wright, R.E. Demographic change and the housing market: Evidence from a comparison of Scotland and England. Urban Stud. 2009, 46, 27–43. [Google Scholar] [CrossRef]
- Mankiw, N.G.; Weil, D.N. The baby boom, the baby bust, and the housing market. Reg. Sci. Urban Econ. 1989, 19, 235–258. [Google Scholar] [CrossRef] [Green Version]
- Simo-Kengne, B.D. Population aging, unemployment and house prices in South Africa. J. Hous. Built Environ. 2018, 34, 153–174. [Google Scholar] [CrossRef]
- Guest, R.; Swift, R. Population ageing and house prices in Australia. Aust. Econ. Rev. 2010, 43, 240–253. [Google Scholar] [CrossRef]
- Takáts, E. Aging and house prices. J. Hous. Econ. 2012, 21, 131–141. [Google Scholar] [CrossRef]
- Hiller, N.; Lerbs, O.W. Aging and urban house prices. Reg. Sci. Urban Econ. 2016, 60, 276–291. [Google Scholar] [CrossRef] [Green Version]
- Jäger, P.; Schmidt, T. Demographic change and house prices: Headwind or tailwind? Econ. Lett. 2017, 160, 82–85. [Google Scholar] [CrossRef]
- Chen, B.K.; Xu, F.; Tan, L. Demographic transition and housing demand in China: Micro empirical research on census data from 1999 to 2025. J. Financ. Res. 2012, 1, 129–140. [Google Scholar]
- Engelhardt, G.V.; Poterba, J.M. House prices and demographic change. Reg. Sci. Urban Econ. 1991, 21, 539–546. [Google Scholar] [CrossRef]
- Green, R.K.; Lee, H. Age, demographics, and the demand for housing, revisited. Reg. Sci. Urban Econ. 2016, 61, 86–98. [Google Scholar] [CrossRef] [Green Version]
- Green, R.; Hendershott, P.H. Age, housing demand, and real house prices. Reg. Sci. Urban Econ. 1996, 26, 465–480. [Google Scholar] [CrossRef]
- Hort, K. The determinants of urban house price fluctuations in Sweden 1968–1994. J. Hous. Econ. 1998, 7, 93–120. [Google Scholar] [CrossRef]
- Chen, Y.; Gibb, K.; Leishman, C.; Wright, R. The impact of population ageing on house prices. Scott. J. Political Econ. 2012, 59, 523–542. [Google Scholar] [CrossRef]
- Li, M.; Shen, K. Population aging and housing consumption: A nonlinear relationship in China. China World Econ. 2013, 21, 60–77. [Google Scholar] [CrossRef]
- Farkas, M. Housing Demand and Demographic Trends: Evidence from Hungry. Master’s Thesis, Central European University, Budapest, Hungary, 2011. [Google Scholar]
- Li, C.; Ni, P.F.; Wan, H.Y. The mystery of China’s housing demand continues to grow: Based on the perspective of population structure. Econ. Res. 2015, 50, 118–133. [Google Scholar]
- Gan, J. Housing wealth and consumption growth: Evidence from a large panel of households. Rev. Financ. Stud. 2010, 23, 2229–2267. [Google Scholar] [CrossRef]
- Chen, Y.B.; Qiu, Z.S. How high housing prices affect residents’ saving rate and property inequality. Econ. Res. 2011, 46, 25–38. [Google Scholar]
- Li, X.S.; Huang, Y.Y. Rising house prices, multi-suite decision-making and savings rate of urban residents in China. Econ. Res. 2015, 50, 100–113. [Google Scholar]
- Kuang, W.D. Changes in house prices and consumption of Chinese urban residents. World Econ. 2011, 34, 21–34. [Google Scholar]
- Wan, J. Household savings and housing prices in China. World Econ. 2015, 38, 172–192. [Google Scholar] [CrossRef]
- Chen, B.K.; Yang, W. Land supply, housing price and China urban residents savings. Econ. Res. 2013, 48, 110–122. [Google Scholar]
- Geng, Z.X.; Sun, Q.X.; Zheng, W. Population aging, asset prices and capital accumulation. Econ. Res. 2016, 51, 29–43. [Google Scholar]
- Samuelson, P.A. An Exact consumption-loan model of interest with or without the social contrivance of Money. J. Political Econ. 1958, 66, 467–482. [Google Scholar] [CrossRef]
- Diamond, P.A. National debt in a neoclassical growth model. Am. Econ. Rev. 1965, 55, 1126–1150. [Google Scholar] [CrossRef]
- Shi, L.; Suen, R.M.H. Asset bubbles in an overlapping generations model with endogenous labor supply. Econ. Lett. 2014, 123, 164–167. [Google Scholar] [CrossRef] [Green Version]
- Lau, S.-H.P. Fertility and mortality changes in an overlapping-generations model with realistic demography. Econ. Model. 2014, 38, 512–521. [Google Scholar] [CrossRef]
- Cipriani, G.P. Population aging and PAYG pensions in the OLG model. J. Popul. Econ. 2014, 27, 251–256. [Google Scholar] [CrossRef]
- d’Albis, H.; Augeraud-Véron, E.; Hupkes, H.J. Local determinacy of prices in an overlapping generations model with continuous trading. J. Math. Econ. 2015, 58, 16–24. [Google Scholar] [CrossRef] [Green Version]
- Tan, H.M.; Yao, Y.D.; Guo, S.Q.; Ning, C. Aging, population migration, financial leverage and long-term economic cycle. Econ. Res. 2016, 51, 69–81. [Google Scholar]
- Xu, J.W.; Xu, Q.Y.; He, F. The demographic factors behind the rise in housing prices: International experience and Chinese evidence. World Econ. 2012, 35, 24–42. [Google Scholar]
- Wang, X.-R.; Hui, E.C.-M.; Sun, J.-X. Population migration, urbanization and housing prices: Evidence from the cities in China. Habitat Int. 2017, 66, 49–56. [Google Scholar] [CrossRef]
- Lyons, R.C. Credit conditions and the housing price ratio: Evidence from Ireland’s boom and bust. J. Hous. Econ. 2018, 42, 84–96. [Google Scholar] [CrossRef]
- Han, L. The effects of price risk on housing demand: Empirical evidence from U.S. markets. Rev. Financ. Stud. 2010, 23, 3889–3928. [Google Scholar] [CrossRef]
- Arribas, I.; García, F.; Guijarro, F.; Oliver, J.; Tamošiūnienė, R. Mass appraisal of residential real estate using multilevel modelling. Int. J. Strateg. Prop. Manag. 2016, 20, 77–87. [Google Scholar] [CrossRef]
- Department of National Economic Comprehensive Statistics, National Bureau of Statistics. 2000 China Regional Economic Statistical Yearbook; Ocean Press: Beijing, China, 2001.
- Department of National Economic Comprehensive Statistics, National Bureau of Statistics. 2010 China Regional Economic Statistical Yearbook; China Statistical Press: Beijing, China, 2011.
- Urban Socio-Economic Survey Team, National Bureau of Statistics. Statistical Yearbook of Chinese Cities-2001; China Statistics Publishing House: Beijing, China, 2002.
- Department of Urban Socio-Economic Survey, National Bureau of Statistics. China Urban Statistics Yearbook 2010; China Statistics Publishing House: Beijing, China, 2011.
- Maddaloni, A.; Musso, A.; Rother, P.; Ward-Warmedinger, M.E.; Westermann, T. Macroeconomic Implications of Demographic Developments in the Euro Area; ECB Occasional Paper No. 51; European Central Bank: Frankfurt, Germany, 2006. [Google Scholar]
- Leff, N.H. Dependency rates and savings rates. Am. Econ. Rev. 1969, 59, 886–896. [Google Scholar] [CrossRef]
- Loayza, N.; Schmidt-Hebbel, K.; Servén, L. What drives private saving across the world? Rev. Econ. Stat. 2000, 82, 165–181. [Google Scholar] [CrossRef]
- Horioka, C.Y.; Suzuki, W.; Hatta, T. Aging, savings, and public pensions in Japan. Asian Econ. Policy Rev. 2007, 2, 303–319. [Google Scholar] [CrossRef]
- Brounen, D.; Koedijk, K.G.; Pownall, R.A.J. Household financial planning and savings behavior. J. Int. Money Financ. 2016, 69, 95–107. [Google Scholar] [CrossRef]
- Wang, W. Savings and growth effects of family planning policy: Theory and empirical analysis of China. Econ. Res. 2010, 45, 63–77. [Google Scholar]
- Li, C.; Luo, R.D. Aging, preventive motivation and household savings rate: An empirical study of China’s second population dividend. Popul. Econ. 2018, 104–113. (In Chinese) [Google Scholar] [CrossRef]
- Wooldridge, J.M. Introductory Econometriccs—A Modern Approach; Cengage Learning: Mason, OH, USA, 2013. [Google Scholar]
- Zheng, X.; Zhou, X.B.; Zhang, L. The impact of social norms on entrepreneurial activity: Evidence from entrepreneurship data in 62 Countries. Econ. Res. 2017, 11, 59–73. (In Chinese) [Google Scholar]
Variables | Variable Symbol | Definition | Unit |
---|---|---|---|
Dependent variable | HP | Average sales price of commercial houses = (sales price of commercial houses)/(sales area of commercial houses) | Yuan/square meter |
Explanatory variables | TAGE | Population dependency ratio (population aged 0–14 years old + population aged over 64 years old)/(population aged 15–64 years old) | % |
YAGE | Child dependency ratio = (population aged 0–14 years old)/ (population 15–64 years old) | % | |
OAGE | Elderly dependency ratio = (population aged over 64 years old)/(population 15–64 years old) | % | |
SAVE | Household savings balance | Yuan | |
Control variables | INVR | rReal estate development investment ratio = (real estate development investment)/(fixed assets investment) | % |
GPOP | Population growth rate | % | |
RENTH | Proportion of rental houses | % |
Time | 2000 | 2010 | |||
---|---|---|---|---|---|
Variables | Mean | Std | Mean | Std | |
Price of commercial houses (Yuan/square meter) | 1268.74 | 654.10 | 5038.45 | 5425.87 | |
(%) | 42.61 | 9.64 | 34.28 | 7.76 | |
(%) | 32.46 | 8.72 | 22.07 | 6.79 | |
Elderly dependency ratio (%) | 10.19 | 2.87 | 12.21 | 2.60 | |
Household savings (Yuan) |
Test Summary | F-Test Statistic | F-Test d.f. | Prob. |
---|---|---|---|
F-test that all u_i = 0 | 1.08 | 5 | 0.2660 |
Models | Model 1 | Model 2 | Model 3 | Model 4 | |
---|---|---|---|---|---|
Variables | OLS | OLS | 2SLS | 2SLS | |
Dummy variables Y10 | 0.780 *** (14.41) | 0.673 *** (12.08) | |||
Population dependency ratio | −0.004 * (−1.80) | −0.0006 (−0.13) | |||
Child dependency ratio | −0.013 *** (−3.27) | −0.031 *** (−3.72) | |||
Elderly dependency ratio | 0.023 ** (1.96) | 0.075 *** (5.12) | |||
Household savings balance logarithm | 0.175 *** (9.00) | 0.163 *** (7.90) | 0.177 *** (3.36) | 0.161 *** (3.03) | |
Real estate development investment ratio | 0.010 *** (5.61) | 0.007 *** (4.10) | 0.010* (1.85) | 0.005 (1.03) | |
Population growth rate | 0.015 ** (2.44) | 0.033 *** (3.46) | 0.014 (1.35) | 0.075 *** (4.10) | |
Proportion of rental houses | 0.011 *** (4.61) | 0.014 *** (5.27) | 0.011 *** (3.05) | 0.018 *** (5.10) | |
Constant term | 4.530 *** (16.19) | 4.609 *** (15.68) | 5.164 *** (6.57) | 4.906 *** (6.46) | |
Number of samples | 514 | 514 | 257 | 257 | |
0.76 | 0.76 | 0.32 | 0.39 |
Robustness Test 1 | Robustness Test 2 | Robustness Test 3 | |||||
---|---|---|---|---|---|---|---|
Models | Model 5 | Model 6 | Model 7 | Model 8 | Model 9 | Model 10 | |
Variables | OLS | OLS | OLS | OLS | GLS | GLS | |
Dummy variables Y10 | 1.060 *** (22.17) | 0.881 *** (13.75) | 0.780 *** (13.37) | 0.674 *** (10.56) | |||
Population dependency ratio | −0.031 *** (−3.78) | −0.008 *** (−3.28) | −0.004 (−1.37) | ||||
Child dependency ratio | −0.043 ** (−3.55) | −0.019 *** (−4.94) | −0.125 *** (−3.74) | ||||
Elderly population dependency ratio | 0.011 (0.61) | 0.029 ** (2.05) | 0.023 *** (3.04) | ||||
Household savings balance logarithm | 0.399 *** (10.68) | 0.354 *** (9.89) | / | / | 0.175 *** (8.10) | 0.163 *** (7.55) | |
Household savings balance to population ratio | / | / | 0.002 *** (2.83) | 0.002 *** (3.03) | / | / | |
Real estate development investment ratio | 0.006 ** (2.48) | 0.005 ** (2.02) | 0.016 *** (8.17) | 0.013 *** (5.66) | 0.010 *** (4.16) | 0.007 *** (3.14) | |
Population growth rate | 0.055 *** (2.95) | 0.080 *** (3.00) | 0.014 * (1.93) | 0.038 *** (3.72) | 0.015 ** (2.08) | 0.033 *** (3.85) | |
Proportion of rental houses | −0.002 (−0.31) | 0.001 (0.24) | 0.010 *** (2.72) | 0.013 *** (3.47) | 0.011 *** (3.96) | 0.014 *** (4.81) | |
Constant term | 2.226 *** (3.56) | 2.642 *** (3.97) | 6.987 *** (65.04) | 6.881 *** (46.93) | 4.531 *** (14.14) | 4.610 *** (14.52) | |
Number of samples | 514 | 514 | 514 | 514 | 514 | 514 | |
0.83 | 0.84 | 0.73 | 0.74 | 0.76 | 0.76 |
Models | Model 11 | Model 12 | Model 13 | Model14 | |
---|---|---|---|---|---|
Variables | OLS | OLS | OLS | OLS | |
Dummy variables Y10 | 0.779 *** (14.46) | 0.664 *** (13.21) | 0.728 *** (14.51) | 0.767 *** (15.05) | |
Population dependency ratio | −0.005 * (−1.92) | ||||
Child dependency ratio | −0.016 *** (−3.85) | −0.013 *** (−3.47) | |||
Elderly population dependency ratio | 0.027 *** (2.98) | 0.019 *** (2.76) | |||
Population dependency ratio * (Household savings balance logarithm-A) | −0.0008 (−0.85) | ||||
Child dependency ratio * (Household savings balance logarithm-A) | −0.002 ** (−2.33) | −0.002 ** (−2.44) | |||
Elderly population dependency ratio * (Household savings balance logarithm-A) | 0.008 ** (2.08) | 0.008 ** (2.34) | |||
Household savings balance logarithm | 0.224 *** (7.15) | 0.119 ** (2.14) | 0.224 *** (7.15) | 0.080 * (1.79) | |
Real estate development investment ratio | 0.010 *** (5.60) | 0.008 *** (4.13) | 0.009 *** (5.33) | 0.009 *** (4.92) | |
Population growth rate | 0.016 ** (2.26) | 0.039 *** (4.22) | 0.028 *** (3.59) | 0.015 *** (2.65) | |
Proportion of rental houses | 0.010 *** (3.55) | 0.014 *** (5.46) | 0.008 *** (3.23) | 0.018 *** (7.71) | |
Constant term | 4.110 *** (7.09) | 5.248 *** (6.58) | 3.977 *** (9.38) | 5.513 *** (8.69) | |
Number of samples | 514 | 514 | 257 | 257 | |
0.76 | 0.77 | 0.76 | 0.77 |
Models | Model 15 | Model 16 | Model 17 | |
---|---|---|---|---|
Variables | OLS | OLS | OLS | |
Dummy variables Y10 | 0.780 *** (14.41) | 0.766 *** (14.70) | 0.738 *** (14.27) | |
Population dependency ratio | −0.004 * (−1.80) | |||
Elderly dependency ratio | 0.016 * (1.75) | |||
Child population dependency ratio | −0.009 *** (−2.93) | |||
Household savings balance logarithm | 0.175 *** (9.00) | 0.178 *** (9.26) | 0.168 *** (8.35) | |
Real estate development investment ratio | 0.010 *** (5.61) | 0.008 *** (4.91) | 0.009 *** (5.36) | |
Population growth rate | 0.015 ** (2.44) | 0.013 ** (2.23) | 0.024 *** (3.18) | |
Proportion of rental houses | 0.011 *** (4.61) | 0.016 *** (6.22) | 0.010 *** (4.48) | |
Constant term | 4.530 *** (16.19) | 4.145 *** (15.98) | 4.731 *** (15.83) | |
Number of samples | 514 | 514 | 514 | |
0.76 | 0.76 | 0.76 |
© 2019 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
Share and Cite
Zeng, S.; Zhang, X.; Wang, X.; Zeng, G. Population Aging, Household Savings and Asset Prices: A Study Based on Urban Commercial Housing Prices. Sustainability 2019, 11, 3194. https://doi.org/10.3390/su11113194
Zeng S, Zhang X, Wang X, Zeng G. Population Aging, Household Savings and Asset Prices: A Study Based on Urban Commercial Housing Prices. Sustainability. 2019; 11(11):3194. https://doi.org/10.3390/su11113194
Chicago/Turabian StyleZeng, Shihong, Xinwei Zhang, Xiaowei Wang, and Guowang Zeng. 2019. "Population Aging, Household Savings and Asset Prices: A Study Based on Urban Commercial Housing Prices" Sustainability 11, no. 11: 3194. https://doi.org/10.3390/su11113194
APA StyleZeng, S., Zhang, X., Wang, X., & Zeng, G. (2019). Population Aging, Household Savings and Asset Prices: A Study Based on Urban Commercial Housing Prices. Sustainability, 11(11), 3194. https://doi.org/10.3390/su11113194