Population Aging and Housing Consumption： A Nonlinear Relationship in China

Mass migration of rural workers to cities will inevitably increase urban housing demand. However, the scale of vacant urban housing will increase in future as a result of the population aging and the rising number of empty nesters. Therefore, demographic transition may not only increase housing demand, but also increase housing supply. Using an overlapping generations model, the present paper investigates the impact of demographic transition on housing consumption. We find that there is a nonlinear relationship between the elderly dependency ratio and housing consumption in China. With the deepening of population aging, housing consumption will increase; when the elderly dependency ratio reaches a turning point, housing consumption will decrease. The turning point of the nonlinear curve also depends on population mobility. A greater degree of population mobility will result in a delayed turning point. Furthermore, the turning point of the nonlinear curve will emerge when China's elderly dependency ratio reaches a value of 32 percent in 2025. This means that over the next decade, China should continue to increase the level of housing supply.