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Financial liberalization and house price dynamics in Europe

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  • Ioannis Ganoulis
  • Massimo Giuliodori

Abstract

This article investigates the determinants of house prices in a sample of European countries over the period 1970 to 2004. Focusing on the role of financial liberalization, we find that it has mainly affected the short-term dynamics of residential prices. In particular, the impulse effects on house prices of income and mortgage debt have become smaller. On the other hand, the effects of interest rates, past house prices and, to a lesser degree, stock market have strengthened. In other words, there seems to have been a certain 'de-linking' of short-term house price dynamics from income, whereas the housing market may have become more similar to a financial asset market, with interest rates and expectations of capital gains playing a more prominent role.

Suggested Citation

  • Ioannis Ganoulis & Massimo Giuliodori, 2011. "Financial liberalization and house price dynamics in Europe," Applied Economics, Taylor & Francis Journals, vol. 43(21), pages 2671-2688.
    • Handle: RePEc:taf:applec:v:43:y:2011:i:21:p:2671-2688
    DOI: 10.1080/00036840903315494
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    1. Christophe Andr頍 & Luis A. Gil-Alana & Rangan Gupta, 2014. "Testing for persistence in housing price-to-income and price-to-rent ratios in 16 OECD countries," Applied Economics, Taylor & Francis Journals, vol. 46(18), pages 2127-2138, June.
    2. Dieter Gerdesmeier & Andreja Lenarčič & Barbara Roffia, 2015. "An alternative method for identifying booms and busts in the Euro area housing market," Applied Economics, Taylor & Francis Journals, vol. 47(5), pages 499-518, January.
    3. Rosenberg, Signe, 2019. "The effects of conventional and unconventional monetary policy on house prices in the Scandinavian countries," Journal of Housing Economics, Elsevier, vol. 46(C).
    4. Hong, Yun & Li, Yi, 2020. "Housing prices and investor sentiment dynamics: Evidence from China using a wavelet approach," Finance Research Letters, Elsevier, vol. 35(C).

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