Booms and busts in housing markets: determinants and implications

Arbeitspapier

This study looks at real estate price booms and busts in industrialised countries. It identifies major and persistent deviations from long term trends for 18 countries and estimates the probabilities of their occurrence using a Random Effects Panel Probit model over the period 1980-2007. It finds that 1) most recent housing booms have been very persistent and of a significant magnitude; 2) there appears to be a strong correlation between the persistence and magnitude of booms and subsequent busts; 3) economic costs (in terms of GDP losses during the post-boom phase) depend significantly on the magnitude and duration of the boom and money and credit developments during that period; 4) a number of policy variables, including short term interest rates, local and global money and credit developments, and the incidence of mortgage market deregulation affect significantly the probability of experiencing booms and busts; and 5) the model is quite successful in identifying booms and busts early on.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 1071

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand ; Housing Supply and Markets
• Subject: Booms and busts ; House prices ; housing market ; Immobilienpreis ; Immobilienmarkt ; Konjunktur ; Spekulationsblase ; Probit-Modell ; Panel ; OECD-Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Agnello, Luca ; Schuknecht, Ludger
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/153505
• Last update: 10.03.2025, 11:43 AM CET