IDEAS home Printed from https://ideas.repec.org/a/taf/chosxx/v29y2014i8p1073-1095.html
   My bibliography  Save this article

The Relationship between Housing Market Intervention for First-Time Buyers and House Price Volatility

Author

Listed:
  • Chyi Lin Lee
  • Richard G. Reed

Abstract

Declining homeownership rates as observed in many western countries have direct and indirect implications for the broader economy; hence, governments have been seeking an effective solution to address this decline. One of the major challenges is the decline in overall homeownership rates with an increasing proportion of households deciding to rent rather than purchase. However, it is surprising that the impact on the housing market following the introduction of a first-time housing subsidy scheme has received relatively little attention. This study addresses this knowledge gap by examining the relationship between (1) housing market intervention based on first-time owner subsidies in a global city and (2) the level of house price volatility in the broader market. For example, the Australian government has implemented different policies designed to ease housing stress among first-time buyers; one high-profile policy was the First-time buyer Grant or First Home Owner Grant (FHOG) in which a cash payment or subsidy is given to new first-time buyers as a direct incentive. Based on a case study approach, an analysis is undertaken of the first-time buyer policy where an innovative approach using the E-GARCH model is employed to assess the effect of the scheme on the housing market. The findings indicated that the FHOG scheme offered a stabilisation effect on the housing market. In addition, there is evidence to support implementation of the FHOG scheme as an effective scheme to enhance housing affordability of first-time buyers. The findings offer a rare insight into the effectiveness of the FHOG scheme in enhancing housing affordability and also maintaining price stabilisation in the broader housing market.

Suggested Citation

  • Chyi Lin Lee & Richard G. Reed, 2014. "The Relationship between Housing Market Intervention for First-Time Buyers and House Price Volatility," Housing Studies, Taylor & Francis Journals, vol. 29(8), pages 1073-1095, November.
    • Handle: RePEc:taf:chosxx:v:29:y:2014:i:8:p:1073-1095
    DOI: 10.1080/02673037.2014.927420
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/02673037.2014.927420
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/02673037.2014.927420?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mark Stephens, 2012. "Tackling Housing Market Volatility in the UK. Part I: Long- and Short-term Volatility," International Journal of Housing Policy, Taylor & Francis Journals, vol. 12(3), pages 367-380.
    2. Rosen, Harvey S., 1985. "Housing subsidies: Effects on housing decisions, efficiency, and equity," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 7, pages 375-420, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. IKM Mokhtarul Wadud & Omar H. M. N. Bashar & Huson Joher Ali Ahmed & William Dimovski, 2022. "Property price dynamics and asymmetric effects of economic policy uncertainty: New evidence from the Australian capital cities," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4359-4380, December.
    2. Zheng, Xian & Chen, Xingtao & Yuan, Ziqing, 2021. "Exploring the spatial spillover effect of home purchase restrictions on residential land prices based on the difference-in-differences approach: Evidence from 195 Chinese cities," Land Use Policy, Elsevier, vol. 102(C).
    3. Suleiman Ahmad Abubakar & Othman Mahmod & Daud Hanita & Abdullah Mohd Lazim & Kadir Evizal Abdul & Kane Ibrahim Lawal & Husin Abdullah, 2023. "Forecasting the Volatility of Real Residential Property Prices in Malaysia: A Comparison of Garch Models," Real Estate Management and Valuation, Sciendo, vol. 31(3), pages 20-31, September.
    4. Jian Liang & Kang Mo Koo & Chyi Lin Lee, 2021. "Transportation infrastructure improvement and real estate value: impact of level crossing removal project on housing prices," Transportation, Springer, vol. 48(6), pages 2969-3011, December.
    5. Paraskevi Katsiampa & Kyriaki Begiazi, 2019. "An empirical analysis of the Scottish housing market by property type," Scottish Journal of Political Economy, Scottish Economic Society, vol. 66(4), pages 559-583, September.
    6. Ming-Te Lee & Chyi Lin Lee & Ming-Long Lee & Chien-Ya Liao, 2017. "Price linkages between Australian housing and stock markets," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 10(2), pages 305-323, April.
    7. Ikenna Stephen Ezennia & Sebnem Onal Hoskara, 2019. "Methodological weaknesses in the measurement approaches and concept of housing affordability used in housing research: A qualitative study," PLOS ONE, Public Library of Science, vol. 14(8), pages 1-27, August.
    8. Chyi Lin Lee, 2017. "An examination of the risk-return relation in the Australian housing market," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 10(3), pages 431-449, June.
    9. Zhou, Zhengyi, 2018. "Housing market sentiment and intervention effectiveness: Evidence from China," Emerging Markets Review, Elsevier, vol. 35(C), pages 91-110.
    10. Abbas Valadkhani & Russell Smyth, 2017. "Self-exciting effects of house prices on unit prices in Australian capital cities," Urban Studies, Urban Studies Journal Limited, vol. 54(10), pages 2376-2394, August.
    11. Shahab Valaei Sharif & Dawn Cassandra Parker & Paul Waddell & Ted Tsiakopoulos, 2023. "Understanding the Effects of Market Volatility on Profitability Perceptions of Housing Market Developers," JRFM, MDPI, vol. 16(10), pages 1-34, October.
    12. Wang, Jianing & Lee, Chyi Lin, 2022. "The value of air quality in housing markets: A comparative study of housing sale and rental markets in China," Energy Policy, Elsevier, vol. 160(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Karla Hoff & Arijit Sen, 2005. "Homeownership, Community Interactions, and Segregation," American Economic Review, American Economic Association, vol. 95(4), pages 1167-1189, September.
    2. Schünemann, Johannes & Trimborn, Timo, 2023. "Boosting taxes for boasting about houses? Status concerns in the housing market," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 120-143.
    3. Edwin Van Gameren & Michiel Ras & Evelien Eggink & Ingrid Ooms, 2005. "The demand for housing services in the Netherlands," ERSA conference papers ersa05p327, European Regional Science Association.
    4. Anas, Alex & Arnott, Richard J., 1997. "Taxes and allowances in a dynamic equilibrium model of urban housing with a size--quality hierarchy," Regional Science and Urban Economics, Elsevier, vol. 27(4-5), pages 547-580, August.
    5. Parry, Ian W. H., 2002. "Funding transportation spending in metropolitan Washington, DC: the costs of alternative revenue sources," Journal of Urban Economics, Elsevier, vol. 52(2), pages 362-390, September.
    6. Gabriel, Stuart A. & Rosenthal, Stuart S., 2005. "Homeownership in the 1980s and 1990s: aggregate trends and racial gaps," Journal of Urban Economics, Elsevier, vol. 57(1), pages 101-127, January.
    7. Green, Richard K. & Vandell, Kerry D., 1999. "Giving households credit: How changes in the U.S. tax code could promote homeownership," Regional Science and Urban Economics, Elsevier, vol. 29(4), pages 419-444, July.
    8. Engelhardt, Gary V. & Mayer, Christopher J., 1998. "Intergenerational Transfers, Borrowing Constraints, and Saving Behavior: Evidence from the Housing Market," Journal of Urban Economics, Elsevier, vol. 44(1), pages 135-157, July.
    9. Brent W. Ambrose & Patric H. Hendershott & David C. Ling & Gary A. McGill, 2022. "Homeownership and taxes: How the TCJA altered the tax code's treatment of housing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(5), pages 1167-1200, September.
    10. Ian W.H. Parry & Antonio M. Bento, 2002. "Tax Deductions, Environmental Policy, and the "Double Dividend" Hypothesis," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 22, pages 397-426, Edward Elgar Publishing.
    11. Donald R. Haurin & Stuart S. Rosenthal, 2007. "The Influence of Household Formation on Homeownership Rates Across Time and Race," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 35(4), pages 411-450, December.
    12. Meri Davlasheridze & Qing Miao, 2021. "Natural disasters, public housing, and the role of disaster aid," Journal of Regional Science, Wiley Blackwell, vol. 61(5), pages 1113-1135, November.
    13. Dan Black & Natalia Kolesnikova & Lowell Taylor, 2009. "Earnings Functions When Wages and Prices Vary by Location," Journal of Labor Economics, University of Chicago Press, vol. 27(1), pages 21-47, January.
    14. Dean Baker & Nicole Woo, 2013. "Bringing Back Subprime? The Hazards of Restructuring the GSEs," CEPR Reports and Issue Briefs 2013-15, Center for Economic and Policy Research (CEPR).
    15. Simone Pellegrino & Massimiliano Piacenza & Gilberto Turati, 2011. "Assessing the Distributional Effects of Housing Taxation in Italy: From the Actual Tax Code to Imputed Rent," CESifo Working Paper Series 3368, CESifo.
    16. Parry, Ian, 2001. "How Should Metropolitan Washington, D.C., Finance Its Transportation Deficit?," RFF Working Paper Series dp-01-12, Resources for the Future.
    17. Squires, Graham & Hutchison, Norman, 2021. "Barriers to affordable housing on brownfield sites," Land Use Policy, Elsevier, vol. 102(C).
    18. Cremer, Helmuth & Gahvari, Firouz, 1995. "Uncertainty and optimal taxation: In defense of commodity taxes," Journal of Public Economics, Elsevier, vol. 56(2), pages 291-310, February.
    19. Skinner, Jonathan, 1996. "The dynamic efficiency cost of not taxing housing," Journal of Public Economics, Elsevier, vol. 59(3), pages 397-417, March.
    20. Saku Aura & Thomas Davidoff, 2005. "Optimal Commodity Taxation When Land and Structures Must Be Taxed at the Same Rate," Working Papers 0505, Department of Economics, University of Missouri.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:chosxx:v:29:y:2014:i:8:p:1073-1095. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/chos20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.