United Kingdom: Selected Issues

International Monetary Fund

No 2003/047, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper examines the factors determining housing prices in the United Kingdom. Based on econometric evidence, the paper assesses whether recent housing price increases can be explained by fundamentals or whether they represent a temporary overshooting of housing prices, characteristic of a bubble. The paper estimates a simple error-correction model that describes the dynamics of real housing prices since the 1970s. Estimation results suggest that earnings and interest rates are the key determinants of housing prices, and that changes in real housing prices exhibit a large degree of persistence.

Keywords: ISCR; CR; right; price; investment; nominal interest rate; productivity gap; equipment investment; U.K. productivity performance; investment ratio; U.K. ratio; U.K. investment; Housing prices; Total factor productivity; Labor productivity; Capital productivity; Europe; Australia and New Zealand (search for similar items in EconPapers)
Pages: 60
Date: 2003-03-03
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Citations: View citations in EconPapers (5)

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