The influence of a mortgage interest and capital deduction policy on house prices

Wouter Vangeel, Laurens Defau and Lieven De Moor

Journal of Property Investment & Finance, 2020, vol. 38, issue 6, 563-577

Abstract: Purpose - Since 2005, Belgian housing prices have strongly increased. As the timing coincides with the implementation of a new fiscal package in order to stimulate homeownership, our study attempts to provide an understanding whether the mortgage interest and capital deduction (MICPD) policy has had the side-effect of increasing housing prices while, at the same time, controlling for key housing price determinants. Design/methodology/approach - A fixed-effects regression model is used on a panel dataset of the three Belgian regions over the period 1995–2015. Findings - Estimations are carried out separately for different house types, being useful as our empirical analysis ascertains a significant price-increasing effect for ordinary houses and apartments but a significant price-reducing effect for villas. In addition, we find, among other things, that interest rates' influence has been less substantial than commonly thought. Originality/value - These results are relevant for all governments willing to stimulate homeownership through fiscal stimuli.

Keywords: Fiscal stimulus; Housing price; House type; Mortgage interest deduction; Mortgage interest and capital deduction; Tax relief (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jpifpp:jpif-08-2019-0102

DOI: 10.1108/JPIF-08-2019-0102

Access Statistics for this article

Journal of Property Investment & Finance is currently edited by Nick French

More articles in Journal of Property Investment & Finance from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().