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The effect of self-financed property buyers on local house prices

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  • Fischer, Andreas
  • Zachmann, Lucca

Abstract

This paper tests the hypothesis whether self-financed property buyers, such as insurance and pension funds, have a larger effect on local house prices than bank-financed property buyers, such as homeowners. Self-financed property buyers of new residential housing are not dependent on mortgage credit and operate independently of the macro-prudential environment. This is not so for bank-financed property buyers. We examine the response of Swiss house prices to new housing investments by self- and bank-financed property buyers at the municipality level between 2008 and 2015: a period when interest rates were at the zero lower bound and macro-prudential regulation became more restrictive. Despite being a small investor class for new residential housing, self-financed property buyers have a disproportionate effect on local house prices.

Suggested Citation

  • Fischer, Andreas & Zachmann, Lucca, 2020. "The effect of self-financed property buyers on local house prices," CEPR Discussion Papers 14632, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14632
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    Cited by:

    1. Auer, Raphael & Matyunina, Alexandra & Ongena, Steven, 2022. "The countercyclical capital buffer and the composition of bank lending," Journal of Financial Intermediation, Elsevier, vol. 52(C).
    2. Fabienne Helfer & Volker Grossmann & Aderonke Osikominu, 2023. "How does immigration affect housing costs in Switzerland?," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 159(1), pages 1-31, December.

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    More about this item

    Keywords

    Self-financed investors; Zero lower bound; Macro-prudential regulation;
    All these keywords.

    JEL classification:

    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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