Assessing Housing Market Crashes over the Past 150 years

George Dotsis (), Panagiotis Petris () and Dimitris Psychoyios ()
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George Dotsis: National and Kapodistrian University of Athens
Panagiotis Petris: National and Kapodistrian University of Athens
Dimitris Psychoyios: University of Piraeus

The Journal of Real Estate Finance and Economics, 2025, vol. 70, issue 2, No 6, 359-377

Abstract: Abstract We assess the predictability of housing market crashes in 18 countries over the years 1870–2020. We find that the rent-to-price ratio is a leading indicator and the most significant predictor of housing market crash episodes. The stance of monetary policy, as proxied by the short-term interest rate, is also an important determinant of the probability of housing market crashes in the post WW2 period. Lower rent-to-price ratios and higher short-term interest rates increase the probability of housing market crashes. In the post-80 s period which is characterized by a significant increase of mortgage lending to households mortgage growth is also an important factor that elevates the probability of crashes in housing prices.

Keywords: Housing market; Crash episodes; Logit model (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11146-023-09960-1

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