Divergence
Your link to a google book did not show all pages. If you look at the full article, you will see it concludes:
"Demographic factors are perversely signed or statistically insignificant" -

http://www.imf.org/external/pubs/ft/wp/2008/wp08211.pdf

ClaireC,

This is from the conclusion of your article:

"House prices are, as expected, inversely related to user costs and directly linked to output. Demographic factors were not found to be robustly related to house price developments over the 20-year sample period, although since the beginning of this decade the correlation seems to have strengthened."

As I wrote in my previous post, there are other factors involved in house prices apart from population. Since none of us is immortal, though, with a stable population, houses would come onto the market at the same rate as people appear who want to buy or rent them, assuming that some areas aren't growing at the expense of others. More people wanting to buy into a limited supply of housing will raise prices. It is much like when Cyclone Larry wiped out most of the Queensland banana crop and bananas went to $13 a kilo. User costs will also go up with a growing population because of the need to supply infrastructure to new residents in advance, as explained by Ralph Musgrave. This isn't rocket science.