scholarly journals More Mortgages, More Homes? The Effect of Housing Financialization on Homeownership in Historical Perspective

2018 ◽  
Vol 46 (2) ◽  
pp. 177-203 ◽  
Author(s):  
Sebastian Kohl
Keyword(s):  
Financial Markets ◽  
Historical Perspective ◽  
House Prices ◽  
House Price ◽  
Macroeconomic Performance ◽  
Negative Effects ◽  
Government Programs ◽  
Mortgage Debt ◽  
Price Bubbles ◽  
Long Run

Recent research has emphasized the negative effects of finance on macroeconomic performance and even cautioned of a “finance curse.” As one of the main drivers of financial sector growth, mortgages have traditionally been hailed as increasing the number of homeowners in a country. This article uses long-run panel data for seventeen countries between 1920 (1950) and 2013 to show that the effect of the “great mortgaging” on homeownership rates is not universally positive. Increasing mortgage debt appears to be neither necessary nor sufficient for higher homeownership levels. There were periods of rising homeownership levels without much increase in mortgages before 1980, thanks to government programs, purchasing power increases, and less inflated house prices. There have also been mortgage increases without homeownership growth, but with house price bubbles thereafter. The liberalization of financial markets might after all be a poor substitute for more traditional housing policies.

scholarly journals U.K. House Prices: Bubbles or Market Efficiency? Evidence from Regional Analysis

2018 ◽  
Vol 11 (3) ◽  
pp. 54 ◽  
Author(s):  
Yi Wu ◽  
Nicole Lux
Keyword(s):  
House Prices ◽  
Regional Analysis ◽  
House Price ◽  
Short Term ◽  
Price Bubbles ◽  
Pooled Mean Group ◽  
Long Run ◽  
Price Growth ◽  
Short Run ◽  
Recent Financial Crisis

This paper studies U.K. regional house prices across nine regions from January 2005 to December 2017 to identify regional versus national effects on house prices and potential house price bubbles. It uses a version of the Gordon dividend discount model, modelling house prices as the present value of imputed rents as a measure of fundamentals. It differentiates between long-term and short-term effect using pooled mean group (PMG) and mean group estimation (MG) to determine variations in regional house prices during different periods relating to the most recent financial crisis. The results confirm that the crisis had differentiating effects in the short term, but there is reversion back to long-run fundamentals. Regional trend analysis shows that the house price growth in the regions has been affected differently in the short run and each region has varying long-run fundamentals. Residential property values in London have shown strongest short-run momentum.

Superstar Cities

2013 ◽  
Vol 5 (4) ◽  
pp. 167-199 ◽  
Author(s):  
Joseph Gyourko ◽  
Christopher Mayer ◽  
Todd Sinai
Keyword(s):  
Metropolitan Area ◽  
Metropolitan Areas ◽  
House Prices ◽  
Aggregate Demand ◽  
House Price ◽  
Lower Income ◽  
Local Factors ◽  
The Past ◽  
Long Run ◽  
Price Appreciation

We document large long-run differences in average house price appreciation across metropolitan areas over the past 50 years, and show they can be explained by an inelastic supply of land in some unique locations combined with an increasing number of highincome households nationally. The resulting high house prices and price-to-rent ratios in those “superstar” areas crowd out lower income households. The same forces generate a similar pattern among municipalities within a metropolitan area. These facts suggest that disparate local house price and income trends can be driven by aggregate demand, not just changes in local factors such as productivity or amenities. (JEL R11, R23, R31, R52)

scholarly journals International Real Estate Review

2012 ◽  
Vol 15 (1) ◽  
pp. 1-42
Author(s):  
Heeho Kim ◽  
◽  
SaeWoon Park ◽  
Sun Hye Lee ◽  
◽  
...  
Keyword(s):  
House Prices ◽  
House Price ◽  
Bank Lending ◽  
Government Policies ◽  
High Price ◽  
Subprime Crisis ◽  
Long Run ◽  
Short Run ◽  
Price Escalation ◽  
Housing Submarket

This paper studies the abnormal price behavior of Kangnam, a premium (high price) housing submarket in Seoul, Korea, which addresses the correlation between house prices, bank lending, and other factors, including income. Kangnam experienced the most dramatic price escalation during the study period (1999-2009) despite Korean government policies to stabilize house prices in 2005 and the U.S. subprime crisis in 2008. The empirical result shows that even though the house price in a premium market is, to some degree, positively influenced by income, it is not affected by bank lending in the short-run while negatively affected in the long-run. This suggests that a premium housing submarket has a peculiar price dynamics of its own unlike the other submarkets which seem to comply more or less with our notion of a general economic theory, especially in terms of house prices and bank lending.

A look into German housing markets: A bubble call?

2018 ◽  
Vol 21 (4) ◽  
pp. 289-301
Author(s):  
Jan R. Kim ◽  
Gieyoung Lim
Keyword(s):  
Housing Market ◽  
House Prices ◽  
House Price ◽  
Housing Markets ◽  
Present Value ◽  
Present Value Model ◽  
Price Bubbles ◽  
Steep Rise ◽  
Value Model ◽  
German Housing Market

The steep rise in German house prices in recent years raises the question of whether a speculative bubble has already emerged. Using a modified present-value model, we estimate the size of speculative house price bubbles in the German housing market. We do not find evidence for positive bubble accumulation in recent years, and interpret the current bullish run as reflecting the correction of house prices that have been undervalued for more than 10 years. With house prices close to their fair values as of 2018:Q1, our answer to the question is, ‘Not yet, but it is likely soon’.

scholarly journals House Price Convergence on the Primary and Secondary Markets: Evidence from Polish Provincial Capitals

2019 ◽  
Vol 27 (4) ◽  
pp. 62-73 ◽  
Author(s):  
Mateusz Tomal
Keyword(s):  
Driving Forces ◽  
House Prices ◽  
Housing Prices ◽  
House Price ◽  
Secondary Markets ◽  
Factors Affecting ◽  
Long Run ◽  
Convergence Clubs ◽  
Shape Pattern ◽  
Convergence Model

Abstract The aim of this study is to identify whether there is a common house price trend across provincial capitals in Poland. The log t regression is the main method of analysis. Additionally, traditional convergence tests based on the concepts of β- and σ-convergence are used. The obtained results indicate that the cities do not share a common price in the long-run. There are, however, convergence clubs on both primary and secondary markets. In each club, house prices across cities tend to converge to their own steady state. Moreover, research on the driving forces of convergence reports that factors affecting housing prices differ among the clubs. Therefore, policymakers should adjust housing policies in accordance with the characteristics of a given club. In turn, the σ-convergence model demonstrated a very interesting finding, namely, a U-shape pattern of convergence, both on the primary and secondary markets. This pattern is strictly correlated with the level of prices on the markets.

Housing Prices and Money Demand: Empirical Evidence in Selected MENA Countries

2019 ◽  
Vol 15 (1) ◽  
Author(s):  
Nadia Mbazia ◽  
Mouldi Djelassi
Keyword(s):  
Money Demand ◽  
House Prices ◽  
Housing Prices ◽  
House Price ◽  
Structural Features ◽  
Demand Model ◽  
Mena Countries ◽  
Long Run ◽  
Short Run ◽  
Dynamic Relationships

Abstract This paper examines the links between housing and money empirically in a money demand framework for a panel of five Middle East and North Africa (MENA) countries using quarterly data from 2007Q3 to 2014Q4 with the inclusion of house prices as a variable representing the developments in housing markets. We applied the Pool Mean Group Estimation technique to estimate the long-run and short-run dynamic relationships in money demand model. Empirical results provide the evidence that higher house prices lead to a rise in M2 demand in long-run and short-run estimations. This finding may explain the importance influence of the house price developments on monetary policy in MENA countries. The results confirm that the cross-country heterogeneity of money holdings is also connected with structural features of the housing market.

scholarly journals A simple measure of beta-convergence revisited

Urban Studies ◽  
2020 ◽  
pp. 004209802096262
Author(s):  
David Gray
Keyword(s):  
Rank Order ◽  
House Prices ◽  
Cycle Phase ◽  
Mortgage Debt ◽  
Income Differentials ◽  
Price Distribution ◽  
Long Run ◽  
Sigma Convergence ◽  
The Uk ◽  
Over Time

Convergence among regions to long-run, non-zero income differentials is predicted by mainstream and alternative spatial theories. A variety of convergence, considered by Sala-i-Martin, focuses on the rank order over time. As some must be growing faster than others, intra-distributional mobility implies convergence of regions. A measure of this from Boyle and McCarthy is the trend in rank concordance. As it is a measure of similarity between a given distribution and other sample periods, we propose that Kendall’s criterion ranking coefficient, combined with concordance, provides better insight into intra-distributional mobility and convergence. Agreement with a distribution can be traced over a series to highlight the mobility over time. This has the advantage of revealing whether mobility entails converging from, reverting to or converging to an order. Although there are phases of sigma-convergence and divergence, what is found in an analysis of regional house prices is that the rank-order is little affected by cycle phase. In trend, the UK price distribution appears to converge to a hierarchy, corresponding better with a very large monocentric urban model or Zipf-type, than a core–periphery-type distribution of prices. The broadening of price spreads is likely to be facilitated by the liberalisation of finance seen elsewhere, and by an appetite for greater mortgage debt.

Consumption, Housing Wealth and Financial Crises

2008 ◽  
Vol 205 ◽  
pp. 57-60 ◽  
Author(s):  
Ray Barrell ◽  
Simon Kirby
Keyword(s):  
Financial Crises ◽  
Structural Model ◽  
House Prices ◽  
House Price ◽  
Banking Crises ◽  
Housing Wealth ◽  
Negative Effects ◽  
Consumption Growth ◽  
Future Evolution ◽  
Induced Changes

This note reviews recent Institute work on the factors that might affect the future evolution of consumption. Drawing on Barrell and Davis (2007), it discusses the evidence for the effects of housing wealth on consumption, and shows that there has been strong and well supported evidence for a link for some time. This evidence suggests that a fall in house prices will cause consumption growth to slow. The discussion also covers evidence from Barrell, Davis and Pomerantz (2006) on the effects of financial crises on consumption behaviour. They suggest that there are large and significant negative effects on consumption during banking crises that are over and above the effects on consumption of the crisis-induced changes in income and wealth. Much of this work is embedded in our structural model, NiGEM, and it is possible to estimate the effects of house price declines and financial crises on consumption and income using the model. The note also gives a set of ready reckoners for the impacts of house price declines on output and of a given associated fall in the level of housing wealth on the level of consumption.

scholarly journals Empirical Analysis of House Price Bubble: A Case Study on Malaysia

2016 ◽  
Vol 11 (12) ◽  
pp. 127
Author(s):  
Fong Kean Yan ◽  
Yap Lya Keng ◽  
Kwek Kien Teng
Keyword(s):  
Gross Domestic Product ◽  
House Prices ◽  
House Price ◽  
Domestic Product ◽  
Price Bubble ◽  
Long Run ◽  
Residential Properties ◽  
Short Run ◽  
Per Capita ◽  
House Price Bubble

The main objective of this research is to investigate the relationship between house price with macroeconomics variables - Gross Domestic Product per capita, inflation rate, Base Lending Rate and amount of household loan disbursed for purchase of residential properties. We try to use these variables to examine if they could trigger a housing bubble to burst in Malaysia. Granger Causality results show that there is univariate relationship from house price to Gross Domestic Product per capita. Though house price and other macroeconomics variables do not Granger–cause each other in short run, but these variables are cointegrated in the long run, i.e. there is no evidence of house price bubble in Malaysia. We suggest that soaring house prices in Malaysia is being supported by the large inflow of foreign funds into the housing sector and the unresponsive supply of houses.

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