On the Effect of Change in Age Structure (Population Ageing) on Housing Price in Iran

Housing is a substantial part of the economy with a significant role in GDP, investment and employment. The growth of this sector will result in prosperity of other sectors of the economy because of its many backward and forward linkages. The recent fluctuations in Iran’s housing price have transmitted to the whole economy and turned to a big challenge. It has been argued in the literature that the demographic factors are also affecting housing price, besides economic forces. The aim of this study is to investigate the impact of changing demographic factors (population aging and population growth rate) alongside macroeconomic variables on housing price in Iran. Using an ARDL model and data for 1973-2018, we find that population growth rate, real per capita income and real construction costs have positive impact on housing price both in short and long run while real price of gold coin and population ageing have negative effect, of course with weaker effect in the short run. Since the model is in logarithmic form, the coefficients become elasticities and comparable to each other. So, the most significant and effective factors in determining housing price, are population ageing, population growth rate, real construction costs, real gold price and real per capita income respectively.