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

Andreas Fischer (afischer@liuc.it) and Lucca Zachmann

No 14632, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Self-financed investors; Zero lower bound; Macro-prudential regulation (search for similar items in EconPapers)
JEL-codes: E59 G20 G21 G28 (search for similar items in EconPapers)
Date: 2020-04
New Economics Papers: this item is included in nep-eur and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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