Authors: Harry Houillon, Natalie Xiaoqi Liu, Helen X. H. Bao
Year: 2026
Status: Under Review
PDF: Download
Research line: Behavioural economics of housing decisions
Abstract
Falling fertility and rising housing costs have moved together across high-income countries, but the relationship between them depends on housing tenure. We develop a two-period model in which renters meet higher rents, a larger deposit requirement and a delayed transition to ownership, while owners may draw on accessible housing equity, so that a rise in house prices moves their fertility decisions in opposite directions. Aggregating the two responses implies that the sign of the relationship observed in area-level data depends on the local homeownership rate and changes at an interior threshold. We test this on a balanced panel of 32 London boroughs from 2001 to 2020, combining Land Registry house prices with fertility, tenure and demographic data from the Office for National Statistics. Higher house prices are associated with lower fertility where homeownership is low, and the association becomes more positive as the ownership share rises, turning positive at around 45 per cent, which is within the observed range of 27 to 79 per cent. The relationship is concentrated in the post-crisis boom of 2012 to 2020 and is stronger in younger and less educated boroughs. The findings are robust to alternative price measures, lag structures and bootstrap inference, and show no material residual spatial dependence.