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Housing purchases and the dynamics of housing wealth

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  • Olympia Bover

    (Banco de España)

Abstract

I model the purchase behavior of main and secondary housing by Spanish households using the panel sample from the first two waves of the Spanish household finance survey (EFF). I estimate discrete hazard models using retrospective and within-period purchase sequences. I also estimate an (S,s) model combining transactions data with longitudinal information on household wealth and housing stock values. I look at the role of adaptive expectations about the rate of return on housing and find they have a positive and signifi cant effect on the demand for houses. This is true for historical and within-period purchase probabilities as well as for the target ratio of housing wealth to total wealth. The volatility of house price growth has a negative effect on purchases for investment but a positive one on purchases for consumption.

Suggested Citation

  • Olympia Bover, 2010. "Housing purchases and the dynamics of housing wealth," Working Papers 1036, Banco de España.
    • Handle: RePEc:bde:wpaper:1036
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    Cited by:

    1. Olympia Bover, 2015. "Measuring expectations from household surveys: new results on subjective probabilities of future house prices," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 6(4), pages 361-405, November.
    2. Houda Graiet & Faouzi Jilani, 2019. "Microeconomic Determinants of Private Retirement Savings: The Case of Tunisia," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 17(1), pages 129-153.
    3. Cristina Barceló & Ernesto Villanueva, 2018. "The risk of job loss, household formation and housing demand: evidence from differences in severance payments," Working Papers 1849, Banco de España.

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    More about this item

    Keywords

    Household finance; house purchases; secondary homes; housing returns; adaptive expectations; (S; s) rule;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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