Aging Population, Housing Market, Life-Cycle Housing Choice in Urban China

Since the beginning of the 2000s, both the demographic structure and pension system in China has experienced a dramatic change, which profoundly impacts the housing market. Since the land profit occupies a large ratio of the government revenue, China’s housing market interacts with the government budget and pension financing. Under this context, we ask two questions: first, in the long run, what are the quantitative impacts of the declining mortality rate and lowering population growth respectively on the housing market and the households’ life-cycle housing profiles? Second, how does the impact of population aging alter under alternative government policy responses, given that the housing market and pension financing interact with each other? To answer these two questions, we construct a stochastic-overlapping-generation model to quantitatively evaluate the potential long-run effect of population aging on China’s housing market