Housing and Consumption in Spain

The impact of macroeconomics variables on housing market is largely analysed in the literature. The usual way where changes on economic variables are transmitted to housing market is through demand factors, affecting to, for instance, the level of household waged-income or to house building investorís expectations. Changes on economic conditions could also affect through supply-side but usually later than impact on demand-side factors occurs. Macroeconomics shocks on housing markets are not similar to those affecting other goods and they are different depending on geographic situation and market characteristics. The aim of this paper is to contrast if a relationship between changes on general economic conditions, showed as changes on prices or interest rates, and housing behaviour exists and how it works addressing housing absorption. It is say, how they impact on demand-side housing factors that clean the market. To do so, we extract cycle on housing absorption and compare it to business cycle using time series techniques to demonstrate their relationship. We concentrate this analyse in Spanish market during a period from 1980 to 1999. Results give evidence about housing absorption use to be concentrated in some short periodsgenerating boom and recession cycles on housing that are, in some of them, independent from business one.