IDEAS home Printed from https://ideas.repec.org/a/exp/bsness/v3y2015i2p129-139.html
   My bibliography  Save this article

Are Housing Markets Decoupled? A Case Study of Residential Real Estate Affordability in Austria

Author

Listed:
  • Florian PHILIPP

    (University of Latvia)

Abstract

Real estate arguably forms the most important asset to most households and the basis for their wealth. Around this context a model has been set up testing the relative affordability of real estate for the median household in Austria and the consequences of lower borrowing costs between 2004 and 2013 by vintage year. In this paper the hypothesis that the significant decline in base interest rates is not sufficient to offset the relative affordability loss caused by declining net household incomes and the simultaneous increase of real estate prices. To test this hypothesis a model has been set up comparing two different Housing Affordability Indices – one including and one excluding financing effects, having been compared via a multi factor model. Based on this calculation the author finds decreased base interest rates to offset relative affordability losses by only approximately 50%, verifying the hypothesis. The paper therefore argues for a potential decoupling of the residential housing market in Austria.

Suggested Citation

  • Florian PHILIPP, 2015. "Are Housing Markets Decoupled? A Case Study of Residential Real Estate Affordability in Austria," Expert Journal of Business and Management, Sprint Investify, vol. 3(2), pages 129-139.
    • Handle: RePEc:exp:bsness:v:3:y:2015:i:2:p:129-139
    as

    Download full text from publisher

    File URL: http://business.expertjournals.com/wp-content/uploads/EJBM_314philipp129-139.pdf
    Download Restriction: no
    File URL: http://business.expertjournals.com/23446781-314/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-987, December.
    2. Donald L. Lerman & William J. Reeder, 1987. "The Affordability of Adequate Housing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 15(4), pages 389-404, December.
    3. Angelika Kallakmaa‐Kapsta & Ene Kolbre, 2013. "Estonian housing market: affordability problem and regulatory framework," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 6(2), pages 146-162, May.
    4. John M. Quigley & Steven Raphael, 2004. "Is Housing Unaffordable? Why Isn't It More Affordable?," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 191-214, Winter.
    5. Souphala Chomsisengphet & Anthony Pennington-Cross, 2006. "The evolution of the subprime mortgage market," Review, Federal Reserve Bank of St. Louis, vol. 88(Jan), pages 31-56.
    6. Michael Stone, 2006. "What is housing affordability? The case for the residual income approach," Housing Policy Debate, Taylor & Francis Journals, vol. 17(1), pages 151-184.
    7. Liu, Benjamin & Skully, Michael, 2005. "The determinants of mortgage yield spread differentials: Securitization," Journal of Multinational Financial Management, Elsevier, vol. 15(4-5), pages 314-333, October.
    8. Nandinee Kutty, 2005. "A new measure of housing affordability: Estimates and analytical results," Housing Policy Debate, Taylor & Francis Journals, vol. 16(1), pages 113-142.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gan, Quan & Hill, Robert J., 2009. "Measuring housing affordability: Looking beyond the median," Journal of Housing Economics, Elsevier, vol. 18(2), pages 115-125, June.
    2. Andrea Kunnert, 2016. "Housing Affordability in Austria by Age and Year of Move-in. Application of the Residual Income and Tailored Ratio Approach," WIFO Working Papers 521, WIFO.
    3. Shen, Ling, 2012. "Are house prices too high in China?," China Economic Review, Elsevier, vol. 23(4), pages 1206-1210.
    4. Stephen Malpezzi, 2023. "Housing affordability and responses during times of stress: A preliminary look during the COVID‐19 pandemic," Contemporary Economic Policy, Western Economic Association International, vol. 41(1), pages 9-40, January.
    5. Gawel, Erik & Sigel, Katja & Bretschneider, Wolfgang, 2011. "Affordability of water supply in Mongolia: Empirical lessons for measuring affordability," UFZ Discussion Papers 9/2011, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    6. Karmali,Nadeem M. & Aline Weng, 2022. "Housing Demand and Affordability in India : Implications for Housing Policy," Policy Research Working Paper Series 10031, The World Bank.
    7. Eoin Corrigan & Daniel Foley & Kieran McQuinn & Conor O’Toole & Rachel Slaymaker, 2019. "Exploring Affordability in the Irish Housing Market," The Economic and Social Review, Economic and Social Studies, vol. 50(1), pages 119-157.
    8. Teresa Schlüter, 2013. "Real Wages, Amenities and the Adjustment of Working Hours Across Regional Labour Markets," SERC Discussion Papers 0130, Centre for Economic Performance, LSE.
    9. Andrea Kunnert, 2016. "Leistbarkeit von Wohnen in Österreich. Operationalisierung und demographische Komponenten," WIFO Studies, WIFO, number 58932, April.
    10. Tilak Abeysinghe & Jiaying Gu, 2011. "Lifetime Income and Housing Affordability in Singapore," Urban Studies, Urban Studies Journal Limited, vol. 48(9), pages 1875-1891, July.
    11. Ben-Shahar, Danny & Gabriel, Stuart & Golan, Roni, 2019. "Housing affordability and inequality:A consumption-adjusted approach," Journal of Housing Economics, Elsevier, vol. 45(C), pages 1-1.
    12. Nicholas Boamah, 2015. "The impact of households characteristics on the state of housing in the Offinso South Municipality (OSM), Ghana," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 17(6), pages 1251-1266, December.
    13. Peter Neuteboom & Dirk Brounen, 2011. "Assessing the Accessibility of the Homeownership Market," Urban Studies, Urban Studies Journal Limited, vol. 48(11), pages 2231-2248, August.
    14. Emma Mulliner & Vida Maliene, 2014. "An Analysis of Professional Perceptions of Criteria Contributing to Sustainable Housing Affordability," Sustainability, MDPI, vol. 7(1), pages 1-23, December.
    15. Chen, Xi, 2018. "Optimal life cycle mortgage and portfolio choices in the presence of the affordability constraint," Journal of Housing Economics, Elsevier, vol. 39(C), pages 1-16.
    16. Schlüter, Teresa, 2013. "Real wages, amenities and the adjustment of working hours across regional labour markets," LSE Research Online Documents on Economics 58529, London School of Economics and Political Science, LSE Library.
    17. Ikenna Stephen Ezennia & Sebnem Onal Hoskara, 2019. "Methodological weaknesses in the measurement approaches and concept of housing affordability used in housing research: A qualitative study," PLOS ONE, Public Library of Science, vol. 14(8), pages 1-27, August.
    18. Zan Yang & Songtao Wang, 2011. "The impact of privatization of public housing on housing affordability in Beijing: An assessment using household survey data," Local Economy, London South Bank University, vol. 26(5), pages 384-400, August.
    19. Mulliner, Emma & Smallbone, Kieran & Maliene, Vida, 2013. "An assessment of sustainable housing affordability using a multiple criteria decision making method," Omega, Elsevier, vol. 41(2), pages 270-279.
    20. Tingzhu Li & Ran Liu & Wei Qi, 2019. "Regional Heterogeneity of Migrant Rent Affordability Stress in Urban China: A Comparison between Skilled and Unskilled Migrants at Prefecture Level and Above," Sustainability, MDPI, vol. 11(21), pages 1-26, October.

    More about this item

    Keywords

    Household Income; Taxation; Real Estate; Interest Rates; Debt Service; Austria; Housing Affordability;
    All these keywords.

    JEL classification:

    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:exp:bsness:v:3:y:2015:i:2:p:129-139. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alin Opreana (email available below). General contact details of provider: https://business.expertjournals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.