How do house prices respond to mortgage supply?

Guglielmo Barone (), Francesco David (), Guido de Blasio and Sauro Mocetti
Additional contact information
Francesco David: Bank of Italy

No 1282, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We examine the impact of household mortgages on house prices. Using biannual data on Italian cities for the years 2003-2015, we build an exogenous and fully data-driven indicator of mortgage supply stances and use it as an instrument for actual extended mortgages. Our results indicate that mortgages have a positive and significant causal effect on house prices, with an estimated elasticity of around 0.1. The estimated effect is larger during the expansionary phase of the housing cycle. We also find evidence of significant spatial heterogeneity: mortgages push real estate values higher in cities where the housing supply curve is less elastic or households are more dependent on external finance.

Keywords: mortgage supply; house prices; local housing market (search for similar items in EconPapers)
JEL-codes: G21 R21 R51 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-eur and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.bancaditalia.it/pubblicazioni/temi-dis ... 282/en_tema-1282.pdf (application/pdf)

Related works:
Journal Article: How do house prices respond to mortgage supply? (2021)
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: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1282_20

Access Statistics for this paper

More papers in Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area Contact information at EDIRC.
Bibliographic data for series maintained by ().