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House Prices and Systemic Events Over the Last Six Centuries

Author

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  • Alona Shmygel

    (University of Geneva - Geneva School of Economics and Management; National Bank of Ukraine)

  • Martin Hoesli

    (University of Geneva - Geneva School of Economics and Management (GSEM); Swiss Finance Institute; University of Aberdeen - Business School)

Abstract

This paper investigates house price dynamics over the very long term using data for Stockholm from 1420 to 2021. We identify overvaluation periods and assess house price responses to systemic events such as price bubbles, wars, and epidemics. We first construct the price-to-income ratio and detect 14 bubble episodes with an average duration of 4.2 years. Using regression analysis, we then find that house prices generally declined by 11-17 percent after the onset of a war, with the results depending on the type of war, and by 16 percent following a bubble burst, with a cumulative impact reaching-27 percent over five years. Epidemics show no significant effect on house prices, with only a short-lived 10% decline when isolated from overlapping events like wars. This research provides a unique, six-century perspective on housing market resilience to systemic shocks.

Suggested Citation

  • Alona Shmygel & Martin Hoesli, 2025. "House Prices and Systemic Events Over the Last Six Centuries," Swiss Finance Institute Research Paper Series 25-09, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2509
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