Macroeconomic determinants of real estate prices. Evidences and lessons from European countries

Ion Anghel, Ciprian Sipos, Marilena Mironiuc and Elena Ionascu

ERES from European Real Estate Society (ERES)

Abstract: Our research investigate the dynamics of European real estate markets from the perspective of the house price index (HPI) in correlation with relevant economic variables, such as: economic growth, household disposable income, residential loans, interest rate on new residential loans, housing stock, and property tax. Thus, we provide a new approach to analyse the real estate market dynamics with practical and direct implications on all three market participants – the debtor, the creditor and the state, in order to ensure financial stability. The results of panel analysis revealed the very strong statistical influence of ratio “nominal house price to disposal income of households” but a weak statistical influence of interest rate and level of property taxes on the price index. This evidences generates discussions about the efficiency of tax and interest rate policies in some countries. Moreover, mortgage credit remains one of the major contributors to real economic growth, accounting for 47% of EU GDP. It facilitates the access of population to real estate properties and, thus, indirectly generates tax revenues in state budgets.

Keywords: Housing Prices; housing supply and markets; Interest Rate; Macroeconomic Determinants; value-based taxation (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2018-01-01
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2018_189

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