House Prices and Mortgage Credit: Empirical Evidence for Ireland*

Abstract

In Ireland, real property prices increased at an average of 12 per cent per annum from 1996 to 2002 with residential mortgage credit also increasing substantially. In this paper, the relationship between domestic bank credit and Irish house prices is examined empirically. Using a number of econometric approaches, we find evidence of a long-run mutually reinforcing relationship. The results are used to underpin a short-run system of the housing and credit sector. Simulations are then conducted to reveal the response of house prices and credit to once-off increases in key explanatory variables. Copyright � 2007 The Authors; Journal compilation � 2007 Blackwell Publishing Ltd and The University of Manchester.

Bubbles and Crises: The Role of House Prices and Credit

“…15 There is also a range of recent papers that confirm the empirical relevance of a financial accelerator effect in a housing context, see e.g. Fitzpatrick and McQuinn (2007); Berlinghieri (2010); Gimeno and Martinez-Carrascal (2010); Anundsen and Jansen (2013) for evidence from Ireland, the US, Spain and Norway, respectively.…”

The Relationship between Mortgage Markets and House Prices: Does Financial Instability Make the Difference?

“…Empirical literature using this macroeconomic-type framework include both cross-country studies (Hofmann, 2001;Annett, 2005;Girouard et al, 2006;Sutton, 2002;Terrones and Otrok, 2004;Tsatsaronis and Zhu, 2004) and individual country studies (Fitzpatrick and McQuinn, 2004;Gerlach and Peng, 2005;and Gimeno and Martínez-Carrascal, 2006). The present paper borrows from these macro-type models.…”

The Determinants of Chinese Property Prices

“…On the other hand, several cross-country evidence have indicated that the property have close relationship with mortgage lending (É gert & Mihaljek, 2007;Lacoviello & Minetti, 2008;Goodhart & Hofmann, 2008;Davis & Zhu, 2010). Capozza et al (2002), Gimeno and Martinez-Carrascal (2006);and Fitzpatrick and McQuinn (2007) investigate the case of USA, Spain and Irland respectively and reach the same conclusion. Liang and Cao (2007) find a unidirectional causality from bank lending, interest rate and income to property prices in China.…”