The Contribution of Housing Markets to Cyclical Resilience

Catte, Pietro; Girouard, Nathalie; Price, Robert W. R.; André, Christophe

doi:10.1787/eco_studies-v2004-art6-en

Cited by 36 publications

(27 citation statements)

References 21 publications

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“…Behavioral equations for these variables are key components of central banks' macro-econometric models, used in forecasting and policy-making. Indeed, asset price fluctuations, particularly of housing and of equities, have raised wide-spread international interest and controversy in recent years (see Catte et al (2004) for evidence and a discussion of the role of institutional differences between countries). This has led to a heightened international interest in asset data.…”

Section: Introductionmentioning

confidence: 99%

Estimates of Household Sector Wealth for South Africa, 1970-2003

Aron

Muellbauer

2006

Rev Income Wealth

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Market values of components of household sector wealth are important explanatory variables for aggregate consumer expenditure and household debt in macro-econometric models. We construct the first coherent set of the main elements of household-sector balance sheet estimates at market value for South Africa. Our quarterly estimates derive from published data on financial flows, and other capital market data, often at book value. Our methods rely, where relevant, on accumulating flow of funds data using appropriate benchmarks, and, where necessary, converting book to market values using appropriate asset price indices. Relating asset to income ratios for various asset classes to asset price movements and other features of the economic environment, throws light on the changing composition of household sector wealth. Most striking are the relative rise in the value of pension wealth and the trend decline of directly held securities, the decline and recent recovery of housing wealth, and the rise in household debt and concomitant decline of liquid assets from the early 1980s to the late 1990s. Copyright � 2006 The Authors; Journal compilation � International Association for Research in Income and Wealth 2006.

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Section: Introductionmentioning

confidence: 99%

Estimates of Household Sector Wealth for South Africa, 1970-2003

Aron

Muellbauer

2006

Rev Income Wealth

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“…In response to the increasing house prices over the long-term, the owner-occupied dwelling became more important as collateral for additional borrowing. In various countries, households have extensively used the opportunity to borrow to use 'mortgage-equity release' (Catte et al 2004). Amongst western developed countries, the Netherlands, together with the UK, Australia and Canada, appears to have the highest level of mortgage-equity release.…”

Section: Theorymentioning

confidence: 99%

“…Amongst western developed countries, the Netherlands, together with the UK, Australia and Canada, appears to have the highest level of mortgage-equity release. In these countries, house-price increases affect private consumption through the mortgage market (Boelhouwer 2002;Catte et al 2004).…”

Section: Theorymentioning

confidence: 99%

Mortgage-equity release: the potential of housing wealth for future Dutch retirees

Toussaint

2012

J Hous and the Built Environ

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Interest in the use of housing wealth for future retirees is a topic of growing interest amongst policymakers and scientists. Owner-occupiers who are outright owners have lower housing expenses than tenants do, and they have substantial nest eggs. Mortgage markets leapt on this development and offers special products for the elderly, with which they could release their housing wealth. The question in this paper involves the extent to which households build housing equity (i.e. wealth) that could be released. This question is particularly interesting for the Netherlands, the country with the highest mortgage debt per capita in the European Union. This paper aims to combine two different theoretical debates: the debate on ''the trade-off between owner-occupation and the welfare state'' and the debate on the ''life cycle theory''. It introduces the concept of the equityto-value ratio, which is derived from the trade-off theory, and reveals the extent to which the people in the Netherlands accumulate housing wealth. This ratio shows that households do build equity. Further analysis indicates that this equity is not built as much by repaying the loan as it is by taking advantage of house price increases.

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“…In the US, government sponsored agencies reduce the lending cost of banks by buying home mortgages. Finally, an OECD study Catte et al (2004) highlights how in many countries the sale of residential property is exempt from capital gains taxes.…”

Section: Mortgage Subsidiesmentioning

confidence: 99%

Mortgage Finance and Technological Change

Döttling

Perotti

2015

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe explore how house prices evolve under technological progress, when housing serves for consumption as well as store of value. Technological change leads to human capital substituting physical capital and manual labor. Reduced use of physical capital implies that firms have less tangible collateral to pledge for external finance. This results in lower business demand for credit and a decline in interest rates. Over time, savings are redirected to mortgage credit, where houses serve as collateral. Under fixed land supply, house prices rise in real terms. The combination of growing wage inequality and mortgage credit leads to high household leverage for low-skill workers, increasing default rates and foreclosures. Restraining mortgage borrowing is more effective than subsidies to limit mortgage defaults, by containing both leverage and house price appreciation. It also leads to lower interest rates, supporting more corporate investment and higher wages.

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The Contribution of Housing Markets to Cyclical Resilience

Cited by 36 publications

References 21 publications

Estimates of Household Sector Wealth for South Africa, 1970-2003

Estimates of Household Sector Wealth for South Africa, 1970-2003

Mortgage-equity release: the potential of housing wealth for future Dutch retirees

Mortgage Finance and Technological Change

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