Low Fertility and the Housing Market: Evidence from Swedish Regional Data

The long-term effect of low birth rates is a decline in the population share of children and young adults. How will such changes in age structure affect the housing market? In this article, panel data sets for Swedish municipalities from 1981 to 2006 are used to answer this question. The use of panel data makes it possible to control for the effect of national-level policy shifts and macroeconomic events through the introduction of fixed time effects. The results show that population aging could lead to less rapid house price growth in the first decades of the twenty first century, compared to the last decades of the twentieth century. These results also hold when local population growth, income growth, and educational levels are controlled for.