History dependence in the housing market
Philippe Bracke and
Silvana Tenreyro ()
No 630, Bank of England working papers from Bank of England
Using data on the universe of housing transactions in England and Wales over a 20-year period, we document a robust pattern of history dependence in housing markets. Sale prices and selling propensities are affected by house prices prevailing in the period in which properties were previously bought. We investigate the causes of history dependence complementing our analysis with administrative data on mortgages and online house listings, which we match to actual sales. We find that cognitive and financial frictions explain the history dependence in the data. Both contributed to the collapse and slow recovery of the volume of housing transactions in the post-crisis period.
Keywords: Housing market; fluctuations; down-payment effects; reference dependence; anchoring; loss aversion (search for similar items in EconPapers)
JEL-codes: D03 E32 R31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-mac and nep-ure
Date: 2016-12-02, Revised 2018-07-13
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Working Paper: History Dependence in the Housing Market (2018)
Working Paper: History dependence in the housing market (2018)
Working Paper: History Dependence in the Housing Market (2017)
Working Paper: History Dependence in the Housing Market (2016)
Working Paper: History dependence in the housing market (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0630
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