The Sustainability of House Price Trends in the Czech Republic
AbstractOn the background of current global mortgage crisis the article discusses the housing market theory and particularly the methods and indicators used for the evaluation of long-term sustainability of house price trends. The authors provide the time series of such indicators for selected OECD countries, critically examine the past research studies evaluating pre-crisis house price development and argue that house price falls present in many developed countries are more the causes than the consequences of mortgage crisis. The change in house price trends in 2007 in many developed countries could be thus interpreted as the result of the previous record house price growth, often labeled as a price bubble. In view of this hypothesis the authors try to assess the sustainability of house price development in the Czech Republic, using several indicators, error correction models and different data sources. The methods for construction of reliable house price indices are also discussed here. The results show that house prices in the Czech Republic could be above their "equilibrium" levels at the end of 2007 but this deviation was far lower than in countries like UK, Spain, Netherlands or Ireland.
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Bibliographic InfoArticle provided by University of Economics, Prague in its journal Politická ekonomie.
Volume (Year): 2010 (2010)
Issue (Month): 2 ()
Postal: Redakce Politické ekonomie, Vysoká škola ekonomická, nám. W. Churchilla 4, 130 67 Praha 3
Find related papers by JEL classification:
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
- P22 - Economic Systems - - Socialist Systems and Transition Economies - - - Prices
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
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