Relationship between demographic aging and housing prices in small and mid-sized cities of Finland
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School of Engineering |
Master's thesis
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Date
2024-09-30
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Mcode
Degree programme
Master's Programme in Real Estate Economics
Language
en
Pages
45
Series
Abstract
This thesis investigates the relationship between demographic aging and property values in small and mid-sized cities in Finland using two different models: one that accounts for temporal variations, such as economic cycles and policy changes, and another that does not. The analysis employs a panel regression model in differences, linking the old-age dependency ratio and total population to real house prices while controlling for other demographic (total population) and macroeconomic (disposable income) variables. By analysing data from 2006 to 2022, this approach provides a comprehensive understanding of both the direct impacts of these demographic and economic variables and how their significance may be moderated by broader macroeconomic conditions. The findings reveal that while an increase in the old-age dependency ratio is associated with a decline in housing prices, this relationship loses significance when temporal variations, such as economic cycles and policy changes, are accounted for. Similarly, the influence of total population on housing prices and positive correlation between disposable income and housing prices, are significant in a simplified model without time fixed effects. However, when controlling for temporal factors, these relationships weaken, suggesting that the direct impact of demographic and economic variables on housing prices may be moderated or overshadowed by broader macroeconomic conditions and year-specific influences. This study contributes to the understanding of how demographic shifts, particularly aging, affect real estate markets in smaller municipalities. The results underscore the importance of considering both demographic and economic variables when analyzing housing market dynamics and provide insights for policy-makers, urban planners and real estate investors in managing the challenges posed by an aging population.Description
Supervisor
Falkenbach, HeidiThesis advisor
Falkenbach, HeidiKeywords
demographic aging, housing prices, housing markets, old-age dependency ratio, demographic changes, disposable income