Anticipated vs. Unanticipated House Price Movements and Transaction Volume

Yavuz Arslan, Birol Kanık and Bülent Köksal

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: Using data from England and Wales, we analyze the relationship between house prices and transaction volume (number of houses sold) and find that there is a negative relationship. When we decompose price changes into anticipated and unanticipated components we find that while anticipated house price changes positively affect transaction volume, unanticipated price changes have a negative effect. These findings give insights for the theories which try to explain the relationship between house prices and transaction volume. Our findings are inconsistent with the 'down-payment effect' approach developed by Stein (1995) and Ortalo-Magne and Rady (2006), and with the 'loss aversion behavior' approach discussed by Genesove and Mayer (2001). However, our results support the evidence of asymmetric decisions on the buyer and seller side documented in Case and Shiller (1988) and partially support the mechanisms in search and matching models.

Keywords: Expectations; Transaction volume; House prices (search for similar items in EconPapers)
JEL-codes: D8 G1 R3 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Anticipated vs. unanticipated house price movements and transaction volume (2015)
Working Paper: Anticipated vs. Unanticipated House Price Movements and Transaction Volume (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:1511

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