Modelling of cycles in the residential real estate market – interactions between the primary and the secondary market and multiplier effects
AbstractWhile analysing the housing market, we focus on the short-term modelling of the housing units market instead of analysing the long-term housing space market. In this context, even a minor change in factors affecting the real estate market leads, due to the multiplier effect, to strong shocks on the demand side, and, consequently, to an excessive reaction of the supply side. These shocks, depending on the price elasticity of supply and demand, may disappear or explode. This articles presents the modelling of cycles in the residential real estate market. We focus on price changes and the number of housing units in the primary and secondary market. We find that in order to smooth the housing cycle, the housing demand needs to be smoothed. This can be achieved with the use of fiscal policy, prudential regulations and housing policy.
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Bibliographic InfoPaper provided by National Bank of Poland, Economic Institute in its series National Bank of Poland Working Papers with number 143.
Date of creation: 2013
Date of revision:
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More information through EDIRC
Housing market cycles; disequilibrium; banking sector; regulation;
Find related papers by JEL classification:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
- 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, Production Analysis, and Firm Location - - - Housing Supply and Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-02 (All new papers)
- NEP-MAC-2013-03-02 (Macroeconomics)
- NEP-URE-2013-03-02 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- William C. Wheaton, 1999. "Real Estate "Cycles": Some Fundamentals," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 27(2), pages 209-230.
- Peter Westaway, . "A simulation model of consumer spending and housing demand," NIESR Discussion Papers 15, National Institute of Economic and Social Research.
- Topel, Robert H & Rosen, Sherwin, 1988. "Housing Investment in the United States," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 718-40, August.
- Waldron, Matt & Zampolli, Fabrizio, 2010. "Household debt, house prices and consumption in the United Kingdom: a quantitative theoretical analysis," Bank of England working papers 379, Bank of England.
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