<p>We model individual demand for housing over the life-cycle, and show the aggregate implications of this behaviour. Individuals delay purchasing their rst home when incomes are low or uncertain. Higher house prices lead households to downsize, rather than to stop being owners. Fixed costs (property transactions taxes) have important impacts on welfare (a wealth eect) and house purchase decisions (substitution eect). In aggregate, positive house price shocks lead to consumption booms among the old but falls in consumption for the young, and reduced housing demand; positive income shocks lead to consumption booms among the young and increased housing demand.</p>
Authors

Research Associate University of Bologna
Matthew is Associate Professor at the University of Bologna focusing on consumption and savings choices and how policy affects them.
Research Associate University of Bologna
Renata is an Associate Professor at the University of Bologna and IFS Research Associate, working on household consumption, saving and labour supply.

Research Fellow University of Oxford
Hamish is the James Meade Professor of Economics at the University of Oxford, a Professorial Fellow of Nuffield College and a Research Fellow at IFS.

cemmap co-Director University College London
Lars Nesheim is a Professor of Economics at UCL and Co-Director of the Centre for Microdata Methods and Practice (cemmap).
Journal article details
- Publisher
- Elsevier
- ISSN
- 1094-2025
- JEL
- D91, R21, G11
- Issue
- January 2012
Suggested citation
Bottazzi, R et al. (2012). 'Modelling the demand for housing over the lifecycle' (2012)
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