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House price volatility: The role of different buyer types

Author

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  • Coates, Dermot

    (Central Bank of Ireland)

  • Lydon, Reamonn

    (Central Bank of Ireland)

  • McCarthy, Yvonne

    (Central Bank of Ireland)

Abstract

This Economic Letter examines the link between house price dynamics in Ireland during the recent housing boom and the composition of buyers in the market. The analysis provides information on the relative riskiness of different buyer types, a topic that has increased in importance with the recent Central Bank of Ireland proposals to cap loan-to-value and loan-to-income ratios for new mortgage borrowings. The analysis points to an association between periods of strong house price growth and the changing composition of Irish property purchasers, and in particular, the rise in the BTL segment.

Suggested Citation

  • Coates, Dermot & Lydon, Reamonn & McCarthy, Yvonne, 2015. "House price volatility: The role of different buyer types," Economic Letters 02/EL/15, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:02/el/15
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    File URL: https://centralbank.ie/docs/default-source/publications/economic-letters/economic-letter---vol-2015-no-2.pdf?sfvrsn=10
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    References listed on IDEAS

    as
    1. Lydon, Reamonn & O'Hanlon, Niall, 2012. "Housing Equity Withdrawal, Property Bubbles and Consumption," Research Technical Papers 05/RT/12, Central Bank of Ireland.
    2. Kennedy, Gerard & McQuinn, Kieran, 2012. "Why are Irish house prices still falling?," Economic Letters 05/EL/12, Central Bank of Ireland.
    3. François Ortalo-Magné & Sven Rady, 2006. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints ," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(2), pages 459-485.
    4. Andrew Benito, 2006. "How does the down-payment constraint affect the UK housing market?," Bank of England working papers 294, Bank of England.
    5. Jeremy C. Stein, 1995. "Prices and Trading Volume in the Housing Market: A Model with Down-Payment Effects," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 379-406.
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    Cited by:

    1. Kelly, Jane & Le Blanc, Julia & Lydon, Reamonn, 2018. "Pockets of risk in European Housing Markets: then and now," Research Technical Papers 12/RT/18, Central Bank of Ireland.
    2. International Monetary Fund, 2016. "Ireland: Financial Sector Assessment Program: Technical Note-Macroprudential Policy Framework," IMF Staff Country Reports 2016/316, International Monetary Fund.
    3. Mark Cassidy & Niamh Hallissey, 2016. "The Introduction of Macroprudential Measures for the Irish Mortgage Market," The Economic and Social Review, Economic and Social Studies, vol. 47(2), pages 271-297.
    4. Lydon, Reamonn & McIndoe-Calder, Tara, 2017. "The Great Irish (De)Leveraging 2005-14," Research Technical Papers 05/RT/17, Central Bank of Ireland.

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