Household Debt and Housing Price: An Empirical Study across 36 Countries

Lai, Fujun; Chan, Sze Nam; Shum, Wai Yan; Zhou, Nan

doi:10.5539/ijbm.v12n11p227

Cited by 6 publications

(4 citation statements)

References 31 publications

(31 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…So, according to the results of research by F. Lai et al We can see that there is a close direct relationship between such financial indicators as the household debt ratio and the prices of residential real estate objects. At the same time, the growth of the household debt ratio (in national practice -consumer debt) causes a steady trend towards rising prices for housing, its construction, reconstruction, and repair [30].…”

Section: Discussionmentioning

confidence: 99%

See 1 more Smart Citation

Financial Leverages of the Regulation of Residential Construction

Prokopenko¹,

Biletskyi²,

Vlasenko³

2023

ФКДПТП

View full text Add to dashboard Cite

The increasing level of population coverage with housing has traditionally been among the most relevant and challenging issues for the national economy of Ukraine. The military conflict, now in its second year, is changing the priorities of the public housing policy and requiring the search for new efficient methods of restoring the lost housing stock and regulating housing construction. The article addresses the volume of capital investment in residential construction in Ukraine and explains the financial framework for residential construction regulation. World best practices in the use of financial instruments in the regulation of the industry are systematized. The authors' view of the system of financial leverage of residential construction regulation is offered. The analysis of the housing affordability indicators shows that the average household income is insufficient to purchase housing and repay a mortgage. Meanwhile, the research indicates that a mortgage is one of the most common financial instruments for the purchase of housing for Ukrainians. The analysis of the level and dynamics of mortgage interest rates shows that they are 4.6 times higher in the euro than in the EU countries. The study of modern housing practices in Ukraine emphasizes the need to introduce new principles of sustainable financial regulation in residential construction. The article substantiates a set of these principles and recommends their implementation. The assessment of modern realities and consequences of hostilities in Ukraine reveals significant losses of housing stock (about 40%) and the need to change the priorities and tasks of public housing policy. An examination of the country's recovery and post-war housing programs allows the identification of the principles of transparency, openness, inclusivity, energy efficiency, resource efficiency, and sustainability as key strategic priorities in financial regulation.

show abstract

Section: Discussionmentioning

confidence: 99%

“…The results of studies conducted by F. Lai et al show a close relationship between such financial indicators as household debt rate and housing price. Meanwhile, growing household debt (in domestic practice -consumer debt) generates a steady trend of growing housing, construction, reconstruction, and maintenance prices [30].…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Leverages of the Regulation of Residential Construction

Prokopenko¹,

Biletskyi²,

Vlasenko³

2023

ФКДПТП

View full text Add to dashboard Cite

show abstract

“…The literature has also shown that certain movements in the economic cycle of certain countries have been caused by the indebtedness promoted by the increase in the price of housing (Illing et al, 2018). According to the International Monetary Fund (IMF), increasing household debt drives economic growth and employment (Lai et al, 2017). Nevertheless, households must slow down spending to pay back their loans, so these effects are reversed.…”

Section: Literature Reviewmentioning

confidence: 99%

Homeownership Rate and Other House Price Determinants Impacts on New House Prices in Colombia

Peñaloza

2020

JADE

View full text Add to dashboard Cite

Homeownership remains a preferred form of tenancy in different parts of the world. The attractions of security, stability, investment potential and a sense of pride outweigh the fear of price instability. For this reason, the Colombian government has encouraged in recent years, various demand policies that have sought to promote the increase in the number of homeowners. However, these ideas could have a severe impact on prices in the real estate market. Therefore, this study seeks to examine the effect of homeownership rate on new house prices in an emerging country with low real estate ownership, credit restrictions and average per capita income. The study uses panel data model to examine the influence of housing tenancy and other variables on the variation of housing prices in Colombia. Data were obtained from various sources including the Central Bank of Colombia, Financial Superintendence of Colombia, and National Administrative Department of Statistics of Colombia. The results show that homeownership rates have a positive effect on the price of new homes, which supports the hypothesis of the research. The population growth of the cities is the factor that is most relevant when explaining the price variations.

show abstract

“…This is probably due to the causality between the two variables. Lai et al (2017), studying the effect of a rising household debt on housing prices, argue that the consumer inflation rate must be included among the determinants of house prices.…”

Section: The Effect Of House Price Growthmentioning

confidence: 99%

Household Debt in OECD Countries: The Role of Supply-Side and Demand-Side Factors

2018

View full text Add to dashboard Cite

In many countries, household debt increased from the 1990s until the global financial crisis of 2007-2008 and then stagnated with the Great Recession, the euro-area sovereign debt crisis and deleveraging. In spite of these common trends, differences in national household debt/disposable income ratios are evident. This paper studies the determinants of household debt using a dataset of 33 countries and taking into account both demand-side and supply-side factors. The econometric exercises, covering the period 1995-2016, yield the following results. First, there is a positive link between household debt and both household wealth and house price growth. Second, the quality of bankruptcy laws relates positively to household debt, whereas longer insolvency resolution times are associated with lower household debt. Third, Anglo-Saxon legal origin and Scandinavian legal origin have a stronger link with household debt than French and German legal origin. Fourth, household debt is higher in countries with social-democratic and liberal welfare models than in conservative and Eastern European welfare states. Fifth, the ratio of public debt to GDP displays a negative association with private debt. Last, the effect of saving on household debt is significant only in the years of household deleveraging, i.e. after the global financial crisis. While the effect of demand-side variables is unstable over time, supply-side variables appear to be more persistent in determining the level of household debt.

show abstract

Household Debt and Housing Price: An Empirical Study across 36 Countries

Cited by 6 publications

References 31 publications

Financial Leverages of the Regulation of Residential Construction

Financial Leverages of the Regulation of Residential Construction

Homeownership Rate and Other House Price Determinants Impacts on New House Prices in Colombia

Household Debt in OECD Countries: The Role of Supply-Side and Demand-Side Factors

Contact Info

Product

Resources

About