European Parliament Library

Fundamental Drivers of House Prices in Advanced Economies, Nan Geng

House prices in many advanced economies have risen substantially in recent decades. But experience indicates that housing prices can diverge from their long-run equilibrium or sustainable levels, potentially followed by adjustments that impact macroeconomic and financial stability. Therefore there is a need to monitor house prices and assess whether they are sustainable. This paper focuses on fundamentals expected to drive long run trends in house prices, including institutional and structural factors. The scale of potential valuation gaps is gauged on the basis of a cross-country panel analysis of house prices in 20 OECD countries
Table Of Contents
Cover -- Contents -- Abstract -- I. Introduction -- II. Fundamental Determinants of House Prices -- III. A Cross-Country Model of Trends in House Prices -- IV. Empirical Findings -- V. Conclusions -- FIGURES -- 1. Uptrend in PTI and DTI Ratios in Selected Advanced Economies -- 2. Real House Price Index -- 3. Real House Price Index -- 4. Household Debt -- 5. Price-to-Rent Ratio: United States -- 6. House Prices and Per Capita Disposable Income -- 7. House Prices and Per Capita Financial Net Wealth -- 8. House Prices and Population -- 9. PTI Ratios and Housing Supply Relative to Demographic Needs -- 10. Low Supply Response to Rising Demand Can Amplify Price Increases -- 11. Estimated Long-Run Housing Supply Elasticity -- 12. Recurrent Taxes on Residential Property -- 13. Tax Relief for Housing Finance, 2016 -- 14. Rent Control -- 15. Variation in Estimated Long-Run Impact of One Ppt Increase in Income on House Prices -- 16. Variation in Estimated Long-Run Impact of One Ppt Increase in Real Mortgage Rate on House Prices -- 17. Variation in Estimated Long-Run Impact of One Ppt Increase in Housing Stock Per Capita on House Prices -- 18. Cross-Country variation in House Price Elasticities with Respect to Demand and Supply Shifters -- 19. Actual and Estimated Long-Run Equilibrium House Prices, and Estimated Valuation Gaps in Selected OECD AEs -- 20. Housing Valuation Gap Under Different Model Specifications -- TABLES -- 1. Current MID from Personal Income Taxes and Recent Reforms in Selected AEs -- 2. A Cross-Country Panel Model: Long-Run Determinants of Real House Prices -- ANNEX -- I. Variable Definitions and Data Sources -- References
Literary Form
non fiction
Physical Description
1 online resource (25 pages)
Specific Material Designation
Form Of Item

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