IDEAS home Printed from https://ideas.repec.org/p/bdi/wptemi/td_1282_20.html
   My bibliography  Save this paper

How do house prices respond to mortgage supply?

Author

Listed:
  • Guglielmo Barone

    (University of Padua)

  • Francesco David

    (Bank of Italy)

  • Guido de Blasio

    (Bank of Italy)

  • Sauro Mocetti

    (Bank of Italy)

Abstract

We examine the impact of household mortgages on house prices. Using biannual data on Italian cities for the years 2003-2015, we build an exogenous and fully data-driven indicator of mortgage supply stances and use it as an instrument for actual extended mortgages. Our results indicate that mortgages have a positive and significant causal effect on house prices, with an estimated elasticity of around 0.1. The estimated effect is larger during the expansionary phase of the housing cycle. We also find evidence of significant spatial heterogeneity: mortgages push real estate values higher in cities where the housing supply curve is less elastic or households are more dependent on external finance.

Suggested Citation

  • Guglielmo Barone & Francesco David & Guido de Blasio & Sauro Mocetti, 2020. "How do house prices respond to mortgage supply?," Temi di discussione (Economic working papers) 1282, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1282_20
    as

    Download full text from publisher

    File URL: https://www.bancaditalia.it/pubblicazioni/temi-discussione/2020/2020-1282/en_tema-1282.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pierluigi Bologna & Wanda Cornacchia & Maddalena Galardo, 2020. "Prudential policies, credit supply and house prices: evidence from Italy," Temi di discussione (Economic working papers) 1294, Bank of Italy, Economic Research and International Relations Area.
    2. Dottori, Davide & Micucci, Giacinto & Sigalotti, Laura, 2024. "Trade debts and bank lending in years of crisis," International Review of Financial Analysis, Elsevier, vol. 92(C).
    3. Bologna, Pierluigi & Cornacchia, Wanda & Galardo, Maddalena, 2022. "Release of a liquidity regulation: What do we learn for credit and house prices?," Journal of Financial Stability, Elsevier, vol. 61(C).

    More about this item

    Keywords

    mortgage supply; house prices; local housing market;
    All these keywords.

    JEL classification:

    • 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
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:bdi:wptemi:td_1282_20. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/bdigvit.html .

    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.