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Borrowing constraints and housing price expectations in the euro area

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  • Ampudia, Miguel
  • Mayordomo, Sergio

Abstract

This paper analyzes the importance of financial constraints on the home ownership decision of European households and their differential effect in periods of positive expectations of housing prices. We document that financial constraints are key drivers of the household homeownership decision being wealth constraints more relevant than income constraints. The wealth constraint is less binding under a scenario in which housing prices exhibit an upward trend.

Suggested Citation

  • Ampudia, Miguel & Mayordomo, Sergio, 2018. "Borrowing constraints and housing price expectations in the euro area," Economic Modelling, Elsevier, vol. 72(C), pages 410-421.
    • Handle: RePEc:eee:ecmode:v:72:y:2018:i:c:p:410-421
    DOI: 10.1016/j.econmod.2018.02.015
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    Cited by:

    1. Brzezinski, Michal & Sałach, Katarzyna, 2021. "Factors that account for the wealth inequality differences between post-socialist countries," Economic Modelling, Elsevier, vol. 105(C).
    2. Huazhu Zheng & Jiao Qian & Guihuan Liu & Yongjiao Wu & Claudio O. Delang & Hongming He, 2023. "Housing prices and household consumption: a threshold effect model analysis in central and western China," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-16, December.
    3. McQuinn, Kieran & O’Toole, Conor & Slaymaker, Rachel, 2021. "Credit access, macroprudential rules and policy interventions: Lessons for potential first time buyers," Journal of Policy Modeling, Elsevier, vol. 43(5), pages 944-963.

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    More about this item

    Keywords

    Housing; Financial constraints; Homeownership;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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