Housing markets and the economy: the assessment

Muellbauer, John; Murphy, Anthony

doi:10.1093/oxrep/grn011

Cited by 191 publications

(136 citation statements)

References 61 publications

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“…Recent studies have found important heterogeneity in the transmission of monetary policy on house prices depending on the structural and institutional features of the mortgage market (Maclennan et al 1998, Calza et al 2007, Muellbauer and Murphy 2008. However, one problem with accounting for institutional differences is the nature of the available data.…”

Section: Resultsmentioning

confidence: 99%

Heterogeneity in money holdings across euro area countries: The role of housing

Setzer

Noord

Wolff

2011

European Journal of Political Economy

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In this paper we examine why monetary aggregates of euro area Member States have developed differently since the inception of the euro. We derive a money demand equation that incorporates housing wealth and collateral as well as substitution effects on real money holdings. Empirically, we show that cross-country differences in real balances are determined not only by income differences, a standard determinant of money demand, but also by house price developments. Higher house prices and higher user costs of housing are both associated with larger money holdings. Country-specific money holdings are also connected with structural features of the housing market.JEL Classification: E41, E51, E52

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Section: Resultsmentioning

confidence: 99%

Heterogeneity in money holdings across euro area countries: The role of housing

Setzer

Noord

Wolff

2011

European Journal of Political Economy

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“…By contrast, Cameron et al (2006), estimating a dynamic panel data model of British regional house prices between 1972 and 2003, find no evidence of a recent bubble. Muellbauer and Murphy (2008) find "no house-price bubble in recent house prices, at least up to 2005, with immigration, income growth, and strong stock-market rises explaining further appreciation and the outperformance of London and the South-east." However, they reckon that by mid-2007, "prices looked a little overvalued".…”

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confidence: 94%

Improving the Functioning of the Housing Market in the United Kingdom

André

2011

OECD Economics Department Working Papers

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A well-functioning housing market is essential for economic prosperity and well-being. A combination of favourable economic and financial conditions and tight housing supply led to sharp increases in real house prices between the mid-1990s and end 2007, which spurred household consumption. While this boosted output growth, economic imbalances and financial weaknesses mounted, leaving the economy vulnerable to the global financial crisis. Current land use planning policy is excessively restrictive, making supply unresponsive to demand and contributing to creating housing shortages and reducing affordability. While additional supply in the private rental market provides an alternative to homeownership for a significant number of households, social housing waiting list numbers have increased rapidly over the past decade. A reform to replace top-down building targets with incentives for local communities to allow development is underway, but the outcomes are somewhat uncertain. Housing taxation is regressive and encourages excessive demand for housing. More effective taxation could help contain demand and stabilise the housing market. Relying more on long-term and diversified funding for mortgages would also improve the stability of the housing market. Améliorer le fonctionnement du marché du logement au Royaume Uni Un marché du logement performant est indispensable à la prospérité économique et au bien-être. Des conditions économiques et financières favorables conjuguées à des tensions sur l’offre de logements ont entraîné une flambée des prix réels de l’immobilier résidentiel entre le milieu des années 90 et la fin de 2007, ce qui a dopé la consommation des ménages. Cela a stimulé la croissance de la production, mais les déséquilibres économiques et financiers ont pris de l’ampleur, rendant l’économie vulnérable à la crise financière mondiale. La politique actuelle d’aménagement du territoire est trop restrictive, ce qui a pour effet de rendre l’offre peu réactive à la demande, contribuant à créer des pénuries de logements et à réduire l’accessibilité financière à la propriété. Tandis qu’une offre supplémentaire sur le marché locatif privé constitue une alternative à l’accession pour un nombre substantiel de ménages, les listes d’attente dans le secteur du logement social se sont rapidement allongées durant la décennie écoulée. Une réforme est engagée pour remplacer les objectifs de construction déterminés de manière centralisée par des incitations octroyées aux collectivités locales pour qu’elles autorisent des projets immobiliers, mais les résultats sont assez incertains. La fiscalité du logement a un caractère régressif et encourage une demande de logements excessive. Une imposition plus efficace aiderait à contenir la demande et à stabiliser le marché du logement. Un recours accru à un financement à long-terme et diversifié des prêts hypothécaires renforcerait également la stabilité du marché du logement.household saving, household wealth, property taxation, United Kingdom, construction, mortgage markets, housi...

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“…Real house price dynamics depend on institutional features and macroeconomic and demographic conditions, most notably disposable income, the housing stock, inflation, interest rates, bank credit, changes in equity prices, population growth, see Muellbauer and Murphy (2008) and Kholodilin et al (2010) for recent analyses. Lower interest rates decrease the opportunity cost of capital invested in housing, reduce the servicing cost of mortgage credit and raise the present value of future household earnings.…”

Section: Introductionmentioning

confidence: 99%

An Early Warning System to Predict Speculative House Price Bubbles

Dreger

Kholodilin

2013

Economics

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In this paper, the authors construct country-specific chronologies of the house price bubbles for 12 OECD countries over the period 1969:Q1-2009:Q4. These chronologies are obtained using a combination of a fundamental approach and a filter approach. The resulting speculative bubble chronology is the one which provides the highest concordance between these two techniques. In addition, the authors suggest an early warning system based on three alternative approaches: A signalling approach, a logit model, and a probit model. It is shown that the latter two models allow much more accurate predictions of house price bubbles than the signalling approach. Furthermore, the predictive accuracy of the logit and probit models is high enough to make them useful in forecasting future speculative bubbles in housing market. Thus, this method can be used by the policymakers in their attempts to quickly detect house price bubbles and attenuate their devastating effects on the domestic and world economy. Published in Special IssueCoping with Systemic Risk JEL C25 C33 E32 E37

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Housing markets and the economy: the assessment

Cited by 191 publications

References 61 publications

Heterogeneity in money holdings across euro area countries: The role of housing

Heterogeneity in money holdings across euro area countries: The role of housing

Improving the Functioning of the Housing Market in the United Kingdom

An Early Warning System to Predict Speculative House Price Bubbles

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