Economics at your fingertips  

Overoptimism and house price bubbles

Kim Abildgren, Niels Lynggård Hansen and Andreas Kuchler

Journal of Macroeconomics, 2018, vol. 56, issue C, 1-14

Abstract: The paper explores the significance of overoptimism for house prices in Denmark using both aggregated data from the Danish Consumer Expectations Survey as well as the underlying household-level microdata matched with administrative register data at a household level. The results indicate that house price developments are partly driven by sentiments decoupled from underlying economic fundamentals. This seems especially to have been the case during the strong house price booms in the mid-1980 s and the mid-2000 s, where overoptimism might have accounted for 15–20% of the house prices' deviation from a constant growth trend. Furthermore, overoptimistic households were more likely to purchase real estate in the 2000 s compared to other households, and they leveraged more when purchasing real estate. There seems thus to be a separate “confidence” channel in the determination of house prices in addition to the variables usually found in standard macroeconomic house-price models.

Keywords: Consumer sentiments; House price bubbles; Microdata; Macroeconomic stabilisation policy (search for similar items in EconPapers)
JEL-codes: D10 D14 E31 E32 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

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:

Access Statistics for this article

Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos

More articles in Journal of Macroeconomics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-12-08
Handle: RePEc:eee:jmacro:v:56:y:2018:i:c:p:1-14