Demographics, Property Prices, and Credit Conditions: Analysis Based on Panel Data from 17 Countries Over a Half-Century

Using panel data from 17 countries with varying economic circumstances from 1974 to 2019, we estimate regression models that explain residential property price dynamics by incorporating demographic factors and considering the interaction of those demographics with credit conditions. Our results show the importance of the demographic factors in modeling the long-run equilibrium of residential property prices. We find that the effect of nominal interest rates determined by monetary policy on asset prices varies depending on the country and the degree of population aging at the time. We also find that the persistently optimistic population projections lead to the oversupply of the residential stock in rapidly aging countries, resulting in stagnant residential property markets.