Are Housing Markets Decoupled? A Case Study of Residential Real Estate Affordability in Austria
Additional contact information
Florian Philipp: University of Latvia
Expert Journal of Business and Management, 2015, vol. 3, issue 2, 129-139
Real estate arguably forms the most important asset to most households and the basis for their wealth. Around this context a model has been set up testing the relative affordability of real estate for the median household in Austria and the consequences of lower borrowing costs between 2004 and 2013 by vintage year. In this paper the hypothesis that the significant decline in base interest rates is not sufficient to offset the relative affordability loss caused by declining net household incomes and the simultaneous increase of real estate prices. To test this hypothesis a model has been set up comparing two different Housing Affordability Indices – one including and one excluding financing effects, having been compared via a multi factor model. Based on this calculation the author finds decreased base interest rates to offset relative affordability losses by only approximately 50%, verifying the hypothesis. The paper therefore argues for a potential decoupling of the residential housing market in Austria.
Keywords: Household Income; Taxation; Real Estate; Interest Rates; Debt Service; Austria; Housing Affordability (search for similar items in EconPapers)
JEL-codes: M20 M21 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations 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:exp:bsness:v:3:y:2015:i:2:p:129-139
Access Statistics for this article
More articles in Expert Journal of Business and Management from Sprint Investify
Series data maintained by Alin Opreana ().