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Risk and vulnerability indicators for the spanish housing market

Author

Listed:
  • Pana Alves

    (Banco de España)

  • Carmen Broto

    (Banco de España)

  • María Gil

    (Banco de España)

  • Matías Lamas

    (Banco de España)

Abstract

The residential real estate market has a significant weight in the Spanish economy and its performance is closely linked to that of the financial cycle. In addition, as evidenced by the real estate crisis that began in Spain in 2008, the risks generated in this sector have important implications for financial stability. The development of a framework for the early identification of risks in this market is therefore key. This article presents two complementary tools to meet this objective. The first is a heat map that provides a visual interpretation of risk levels in this market for a wide selection of individual indicators. The second is a synthetic indicator that summarizes the information provided by the individual indicators. This index complements the information of the heat map, since it measures both the intensity of the risks in each period and their composition. Both the heat map and the synthetic indicator suggest that, in recent months, the vulnerabilities that had been accumulating in the housing market since 2021 have somewhat reverted.

Suggested Citation

  • Pana Alves & Carmen Broto & María Gil & Matías Lamas, 2023. "Risk and vulnerability indicators for the spanish housing market," Occasional Papers 2314, Banco de España.
    • Handle: RePEc:bde:opaper:2314e
    DOI: https://doi.org/10.53479/36275
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    More about this item

    Keywords

    housing market; early warning indicators; heat map; synthetic index;
    All these keywords.

    JEL classification:

    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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