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Fundamental Drivers of House Prices in Advanced Economies

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  • Ms. Nan Geng
Abstract
House prices in many advanced economies have risen substantially in recent decades. But experience indicates that housing prices can diverge from their long-run equilibrium or sustainable levels, potentially followed by adjustments that impact macroeconomic and financial stability. Therefore there is a need to monitor house prices and assess whether they are sustainable. This paper focuses on fundamentals expected to drive long run trends in house prices, including institutional and structural factors. The scale of potential valuation gaps is gauged on the basis of a cross-country panel analysis of house prices in 20 OECD countries.

Suggested Citation

  • Ms. Nan Geng, 2018. "Fundamental Drivers of House Prices in Advanced Economies," IMF Working Papers 2018/164, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2018/164
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    Cited by:

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    2. Bofinger, Peter & Feld, Lars P. & Schmidt, Christoph M. & Schnabel, Isabel & Wieland, Volker, 2018. "Vor wichtigen wirtschaftspolitischen Weichenstellungen. Jahresgutachten 2018/19 [Setting the Right Course for Economic Policy. Annual Report 2018/19]," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201819.
    3. Markus Hertrich, 2019. "A Novel Housing Price Misalignment Indicator for Germany," German Economic Review, Verein für Socialpolitik, vol. 20(4), pages 759-794, November.
    4. Brausewetter, Lars & Thomsen, Stephan L. & Trunzer, Johannes, 2022. "Explaining regional disparities in housing prices across German districts," IWH Discussion Papers 13/2022, Halle Institute for Economic Research (IWH).
    5. Yao, Fang, 2022. "Estimating the Trend of the House Price to Income Ratio in Ireland," Research Technical Papers 8/RT/22, Central Bank of Ireland.
    6. Haroon Mumtaz & Roman Sustek, 2023. "Global house prices since 1950," Discussion Papers 2307, Centre for Macroeconomics (CFM).
    7. Federica Ciocchetta & Elisa Guglielminetti & Alessandro Mistretta, 2024. "What Drives House Prices in Europe?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 86(5), pages 1089-1121, October.
    8. Michal Andrle & Miroslav Plašil, 2019. "Assessing House Prices with Prudential and Valuation Measures," IMF Working Papers 2019/059, International Monetary Fund.
    9. Seung Kyum Kim & James K. Hammitt, 2022. "Hurricane risk perceptions and housing market responses: the pricing effects of risk-perception factors and hurricane characteristics," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 114(3), pages 3743-3761, December.
    10. Juan Carlos Cuestas & Merike Kukk, 2020. "The Spanish housing market: is it fundamentally broken?," Applied Economics Letters, Taylor & Francis Journals, vol. 27(15), pages 1295-1299, September.
    11. Alexandre Coulondre & Vincent Lasserre-Bigorry, 2022. "Les territoires de la (non-) production de logements en France," Working Papers halshs-03931574, HAL.
    12. Alona Shmygel, 2022. "House Price Bubble Detection in Ukraine," IHEID Working Papers 22-2022, Economics Section, The Graduate Institute of International Studies.
    13. Kajuth, Florian, 2021. "Land leverage and the housing market: Evidence from Germany1," Journal of Housing Economics, Elsevier, vol. 51(C).
    14. Ales Melecky & Daniel Paksi, 2024. "Drivers of European housing prices in the new millennium: demand, financial, and supply determinants," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 51(3), pages 731-753, August.
    15. Dieckelmann, Daniel & Hempell, Hannah S. & Jarmulska, Barbara & Lang, Jan Hannes & Rusnák, Marek, 2023. "House prices and ultra-low interest rates: exploring the non-linear nexus," Working Paper Series 2789, European Central Bank.
    16. Pinjaman, Saizal & Kogid, Mori, 2020. "Macroeconomic Determinants of House Prices in Malaysia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 54(1), pages 153-165.
    17. Vítor Martins & Alessandro Turrini & Bořek Vašíček & Madalina Zamfir, 2021. "Euro Area Housing Markets: Trends, Challenges and Policy Responses," European Economy - Discussion Papers 147, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    18. Damjanović, Milan & Lenarčič, Črt, 2023. "Constructing a house price misalignment indicator: revisited and revamped," MPRA Paper 118489, University Library of Munich, Germany.
    19. Chung Yim Yiu, 2023. "A Natural Quasi-Experiment of the Monetary Policy Shocks on the Housing Markets of New Zealand during COVID-19," JRFM, MDPI, vol. 16(2), pages 1-16, January.
    20. Christian Reiner & Robert Musil, 2023. "The regional variation of a housing boom. Disparities of land prices in Austria, 2000–2018 [Die regionale Differenzierung eines Immobilien-Booms. Disparitäten der Baulandpreise in Österreich, 2000–," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 43(1), pages 125-146, April.
    21. P. Reusens & Ch. Warisse, 2018. "House prices and economic growth in Belgium," Economic Review, National Bank of Belgium, issue iv, pages 81-106, december.
    22. Eleftherios Kourtis & Panayiotis Curtis & Michael Kourtis, 2020. "Spatial Differentiation of Urban Property Prices as a Repercussion in the Aftermath of a Civil Disorder Incident: The 2011 London Case," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 10(4), pages 3-24.

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