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The housing market: the impact of macroprudential measures in France

Author

Listed:
  • Avouyi-Dovi, S.
  • Labonne, C.
  • Lecat, R.

Abstract

The housing market is a central macroprudential policy concern in France due to the significant proportion of residential property loans in bank balance sheets and the high weight of housing in household wealth. The surge in house prices at the start of the 2000s means we cannot rule out the risk of a bubble or a sharp downward correction, even though prices currently seem to be stabilising. However, if the evolution of house prices does start to pose a threat to financial stability, French authorities have access to a number of macroprudential tools that can be used to modify trends in factors such as the provision of housing loans. Using a model, this article attempts to examine the impact of measures which directly or indirectly influence loan interest rates and maturities, or the size of repayments in relation to household income. The empirical results show that these measures have a significant impact on trends in home lending, but a more limited impact on house prices due to the way variations in lending affect housing supply.

Suggested Citation

  • Avouyi-Dovi, S. & Labonne, C. & Lecat, R., 2014. "The housing market: the impact of macroprudential measures in France," Financial Stability Review, Banque de France, issue 18, pages 195-206, April.
    • Handle: RePEc:bfr:fisrev:2014:18:19
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    References listed on IDEAS

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    Cited by:

    1. Carpantier, Jean-Francois & Olivera, Javier & Van Kerm, Philippe, 2018. "Macroprudential policy and household wealth inequality," Journal of International Money and Finance, Elsevier, vol. 85(C), pages 262-277.
    2. Kelly, Robert & McCann, Fergal & O’Toole, Conor, 2018. "Credit conditions, macroprudential policy and house prices," Journal of Housing Economics, Elsevier, vol. 41(C), pages 153-167.
    3. McInerney, Niall, 2019. "Macroprudential Policy, Banking and the Real Estate Sector," MPRA Paper 91777, University Library of Munich, Germany.
    4. Sara Ferreira Filipe, 2018. "Housing prices and mortgage credit in Luxembourg," BCL working papers 117, Central Bank of Luxembourg.
    5. Avouyi-Dovi, S. & Lecat, R. & Labonne, C., 2016. "The French housing market: what would be the impact of macroprudential measures?," Rue de la Banque, Banque de France, issue 26, june..
    6. S. Avouyi-Dovi & C. Labonne & R. Lecat & S. Ray, 2017. "Insight from a Time-Varying VAR Model with Stochastic Volatility of the French Housing and Credit Markets," Working papers 620, Banque de France.
    7. Dreger, Christian & Gerdesmeier, Dieter & Roffia, Barbara, 2020. "The impact of credit for house price overvaluations in the euro area: Evidence from threshold models," MPRA Paper 99523, University Library of Munich, Germany.

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