Deputy Governor of the Bank of Japan Highlights Demographic Trends as Key Drivers of Property Price Movements
| Date Published | 1/4/2013 |
| Author | Marja Hoek-Smit |
| Theme | |
| Country | Japan |
January 4, 2013
San Diego, California
In
a keynote speech at the special Panel on Property Markets, financial stability, and Macroprudential Policies at the ASSA/ AREUEA Meeting in
San Diego, Deputy Governor
of the Central Bank of Japan, Dr. Kiyohiko G. Nishimura, discussed the
critical role of demographic trends as key drivers of the
property price movements over the past few decades. In particular, he
argued that a growing young population increases the likelihood of a property bubble.
The increased demand for property from a growing young population is likely to induce
the institutional change of a loosening of financial laws and regulations that pushes up
prices
further, thereby fueling a malign price bubble. In contrast, the
negative effects of the bursting of a price bubble are all the
more pronounced where there is an ageing population.
Critically, this issue highlights the very fact of the
“procyclicality” of institutional changes in laws and regulations induced by
demographic change. The Deputy Governor draws three policy implications:
firstly, the need, to recognize the significant effects of demographic trends, secondly, to
avoid too loose a policy in the demographic bonus phase, and thirdly, to avoid too strict
a policy in the demographic onus phase.
Links to the full paper