With the nearing retirement of a large number of baby boomers (born between
1955 and 1963), who account for 19.2 percent of the working-age population,
there are concerns that this may have negative impacts on the housing market. In
this regard, this paper analyzes the housing consumption behavior of each
generation, particularly in terms of housing tenure choice and living space, using
basic statistical data from the Survey of Household Finances and Living Conditions
for 2012 through 2016.
Looking at the housing consumption behavior of baby boomers, contrary to
general expectations, they do not sell their houses or reduce their living spaces
around the time of retirement. Our panel model, designed to control for other
factors that affect housing consumption behavior, such as the number of
household members and income, also shows that the baby boomers' housing
consumption behavior has not changed much. According to the results, as the
baby boomers get older, they are more likely to be owner-occupiers living in
larger spaces, and their housing consumption behavior is not affected much by
factors such as the number of household members and income. However, the
older group, those aged 65 or more, shows totally different housing
consumption behavior from that of baby boomers. Members of the older
generation are less likely to be owner-occupiers and tend to live in smaller
spaces as they get older.
This paper conducts a simulation to estimate how this difference in housing
consumption behavior between baby boomers and the older generation will affect
housing consumption behavior of entire households in the future. It is estimated
that housing tenure choices will not change much ─ while baby boomers joining
the older generation will work as a factor dragging down their housing
consumption, it will be offset by consumption by the younger generation. Living
spaces, however, are estimated to gradually decrease.
Considering these analysis results, future housing supply policy should focus on
small- and medium-sized housing units, in reflection of changes in housing demand
following demographic changes, and efforts need to be made to ensure income
stability for the older generation, for example by facilitating reserve mortgage
loans.