The dynamic effect of population ageing on house prices: evidence from Korea

Abstract

Abstract This study empirically analyses how population ageing affects house price using sample data of six metropolitan cities and seven provinces of Korea over the time period from 1990 to 2014. Panel regression results show that economic and demographic factors such as real GRDP per capita and the dependency ratio affect real house prices significantly. However, total population is not statistically significant. House price in regional market is inversely correlated with the dependency ratio, but positively correlated with GRDP per capita in each region. From these results, it can be estimated that the house price will decline by 3–12% in 2020, and more than 20% in 2030. The headwinds are the largest for provinces where ageing is very fast such as Jeonnam and Gyeongbuk – less urbanized and industrialized regions compared to other regions in Korea.