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Interest Rate Elasticity of Residential Housing Prices

Author

Listed:
  • Mr. Plamen K Iossifov
  • Mr. Martin Cihak
  • Amar Shanghavi

Abstract

We examine the interest rate elasticity of housing prices, advancingthe empirical literature in two directions. First, we take a commonly used cross-country panel dataset and evaluate the housing price equation using a consistent estimator in the presence of endogenous explanatory variables and a lagged dependent variable. Second, we carry-out a novel analysis of determinants of residential housing prices in a cross-section of countries. Our results show that the short-term interest rate, and hence monetary policy, has a sizable impact on residential housing prices.

Suggested Citation

  • Mr. Plamen K Iossifov & Mr. Martin Cihak & Amar Shanghavi, 2008. "Interest Rate Elasticity of Residential Housing Prices," IMF Working Papers 2008/247, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2008/247
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    Citations

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    Cited by:

    1. Ghosh, Saibal, 2010. "Credit Growth, Bank Soundness and Financial Fragility: Evidence from Indian Banking Sector," MPRA Paper 24715, University Library of Munich, Germany.
    2. Hense, Florian, 2015. "Interest rate elasticity of bank loans: The case for sector-specific capital requirements," CFS Working Paper Series 504, Center for Financial Studies (CFS).
    3. Béchir Bouzid, 2010. "Titrisation des emprunts hypothécaires et bulle immobilière aux États-Unis : les origines d’une débâcle," Revue d'Économie Financière, Programme National Persée, vol. 97(2), pages 101-142.
    4. Masron, tajul & Mohd Nor, Abu Hassan Shaari, 2016. "Foreign Investment in Real Estate and Housing Affordability," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 50(1), pages 15-28.
    5. Mr. Plamen K Iossifov & Jiri Podpiera, 2014. "Are Non-Euro Area EU Countries Importing Low Inflation from the Euro Area?," IMF Working Papers 2014/191, International Monetary Fund.
    6. Mr. Luis M. Cubeddu & Mr. Camilo E Tovar Mora & Ms. Evridiki Tsounta, 2012. "Latin America: Vulnerabilities Under Construction?," IMF Working Papers 2012/193, International Monetary Fund.
    7. Ruben Tarne & Dirk Bezemer, 2023. "ousing affordability in a monetary economy: an agent-based model of the Dutch housing market," IMK Working Paper 222-2023, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    8. Maynou, Laia & Monfort, Mercedes & Morley, Bruce & Ordóñez, Javier, 2021. "Club convergence in European housing prices: The role of macroeconomic and housing market fundamentals," Economic Modelling, Elsevier, vol. 103(C).
    9. Koetter, Michael & Poghosyan, Tigran, 2010. "Real estate prices and bank stability," Journal of Banking & Finance, Elsevier, vol. 34(6), pages 1129-1138, June.
    10. Dieckelmann, Daniel & Hempell, Hannah S. & Jarmulska, Barbara & Lang, Jan Hannes & Rusnák, Marek, 2023. "House prices and ultra-low interest rates: exploring the non-linear nexus," Working Paper Series 2789, European Central Bank.
    11. Ivan Nikoliæ, 2015. "Price determinants of newly built dwelling in Serbia," Working papers 29, National Bank of Serbia.
    12. Leonor Coutinho & Julien Castiaux & Jean-Charles Bricongne & Nicolas Philiponnet, 2018. "Housing Market Developments in Cyprus," European Economy - Economic Briefs 038, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

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