THE EFFECT OF HOME AND RENT PRICES ON PRIVATE
Kahan Michael () and
Sigal Ribon ()
Additional contact information
Kahan Michael: Bank of Israel
Israel Economic Review, 2014, vol. 11, issue 1, 97-143
Abstract: This work uses data from the Israeli Household Expenditure Survey for 2003â2011 to assess the effect of changes in home and rent prices on householdsâ private consumption expenditure. We find that an increase in home prices acts to increase ownersâ consumption, particularly in the intermediate age groupsâbetween 35 and 55âwhile the effects of home prices on consumption by younger or older households is not significant. The analysis shows that the development of regional prices, which better reflect the value of household property than the general average price, is what affects private consumption. The effect is of a magnitude of 0.18âhigher than estimates obtained in studies for other countries. The effect of the substantial home price increases since 2008 on private consumption was stronger than those of the prolonged price decline in the ten years ending in 2007. The rapid increase in home prices between 2009 and 2011, and particularly in 2010, contributed more than 1 percentage point to private consumption expenditure in each of these years (according to the Expenditure Survey) as against a smaller contribution in the preceding years. The increase in rent contributed to a decline in consumption by apartment tenants, contrasted with an increase in consumption by landlords. Overall, the housing market abetted the growth of private consumption during these years.
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:boi:isrerv:v:11:y:2014:i:1:p:97-143
Access Statistics for this article
More articles in Israel Economic Review from Bank of Israel Contact information at EDIRC.
Bibliographic data for series maintained by Yossi Yakhin ().