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Modelling of cycles in the residential real estate market – interactions between the primary and the secondary market and multiplier effects

Hanna Augustyniak, Jacek Łaszek, Krzysztof Olszewski () and Joanna Waszczuk
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Hanna Augustyniak: National Bank of Poland, Economic Institute, http://www.nbp.pl

No 143, NBP Working Papers from Narodowy Bank Polski, Economic Research Department

Abstract: While analysing the housing market, we focus on the short-term modelling of the housing units market instead of analysing the long-term housing space market. In this context, even a minor change in factors affecting the real estate market leads, due to the multiplier effect, to strong shocks on the demand side, and, consequently, to an excessive reaction of the supply side. These shocks, depending on the price elasticity of supply and demand, may disappear or explode. This articles presents the modelling of cycles in the residential real estate market. We focus on price changes and the number of housing units in the primary and secondary market. We find that in order to smooth the housing cycle, the housing demand needs to be smoothed. This can be achieved with the use of fiscal policy, prudential regulations and housing policy.

Keywords: Housing market cycles; disequilibrium; banking sector; regulation (search for similar items in EconPapers)
JEL-codes: E32 E44 E37 R21 R31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-ure
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:nbp:nbpmis:143

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