Do house prices impact business starts?

Balasubramanyan, Lakshmi; Coulson, Edward

doi:10.1016/j.jhe.2013.01.001

Cited by 7 publications

(8 citation statements)

References 17 publications

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“…Both coefficients concerning housing market conditions are statistically significant and positive, indicating that a positive relationship exists between new firm formation and both house price appreciation and house price level, respectively. Our finding supports the results of Adelino et al (2015) and of Balasubramanyan, Coulson (2013). Hence, the change in startups per capita for the period 2007-2014 can be explained by determinants that measure either the situation in 2007 or the change between 2001 and 2007.…”

Section: Resultssupporting

confidence: 91%

The effect of house prices on business start-ups: A review and analysis using Swedish regional data

Berggren

Fili

Wilhelmsson

2017

REGION

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Abstract. Entrepreneurs are at the core of economic development in that they start new businesses or make existing firms grow. To fulfill this important role, entrepreneurs need access to financing. Owing to information asymmetry and the relatively high risk associated with business startups, many financiers shy away from engaging in relationships with firms during the early stages of their development. Based on the existing body of knowledge on the financing of entrepreneurship, we know that insider finance is of paramount importance in the early stages of firms' development. We expand this knowledge base by analyzing the influence of house prices on business startups across municipalities in Sweden. In our analysis, we include data from all municipalities in Sweden. Our data on house prices and control variables are collected in period one, and our data on the frequency of startups are collected in period two. We find that rising house prices in a municipality lead to a higher frequency of startups. In our spatial Durbin model, we find that a 1% increase in house prices leads to around 0.15% increase in startups. Our findings are in line with the limited international research that has been previously conducted, and therefore, our study might make a small but vital addition to this growing body of knowledge within the area of entrepreneurship and regional development.JEL classification: R11, R31, M13

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Section: Resultssupporting

confidence: 91%

The effect of house prices on business start-ups: A review and analysis using Swedish regional data

Berggren

Fili

Wilhelmsson

2017

REGION

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“…Such economies experience very high liquidity of housing collateral, and housing-related lending products are very common (e.g. Adelino et al, 2015; Balasubramanyan and Coulson, 2013; Black et al, 1996; Connolly et al, 2015; Corradin and Popov, 2015; Fairlie and Krashinsky, 2012; Harding and Rosenthal, 2017; Kerr et al, 2014; Robson, 1996; Schmalz et al, 2017).…”

Section: Analysis and Resultsmentioning

confidence: 99%

“…The theoretical and empirical literature emphasises two positive channels and two negative channels through which house prices influence business formation. Recent studies in countries with well-developed financial systems have shown that a housing boom positively influences small business start-ups, entrepreneurship and self-employment through the housing collateral enhancement and the housing wealth effects channels (Adelino et al, 2015; Balasubramanyan and Coulson, 2013; Corradin and Popov, 2015; Fairlie and Krashinsky, 2012; Harding and Rosenthal, 2017; and Kerr et al, 2014, for the US; Black et al, 1996; and Robson, 1996, for the UK; Connolly et al, 2015, for Australia; Schmalz et al, 2017, for France). Under the housing collateral channel, ‘rising housing prices increase the housing equity of residential property owners.…”

Section: Introductionmentioning

confidence: 99%

Urban house prices and investments in small and medium-sized industrial firms: Evidence from provinces of Iran

Gholipour

2020

Urban Studies

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Using data from provinces of Iran from 2005 to 2016 and applying panel cointegrating regressions, I find that increases in real house prices have a negative and statistically significant effect on investments in small and medium-sized industrial firms. There are at least three possible mechanisms through which increases in house prices adversely affect industrial entrepreneurship. They (1) generate housing construction investment opportunities with high returns, (2) attract many urban adults with tertiary education to the real estate brokerage industry, and (3) encourage people to save more to buy houses (which is one of the prerequisites for marriage in Iran).

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“…Changes in residential property prices may also affect the development of entrepreneurship, the establishment of new companies (Adelino et al, 2015;Balasubramanyan & Coulson, 2013;Corradin & Popov, 2015;Hvide & Møen, 2010) and the volume of employment (Fort et al, 2013;Mehrotra & Sergeyev, 2016;Schmalz et al, 2017).…”

Section: Introductionmentioning

confidence: 99%

Housing Price Cycles in Poland – The Case of 18 Provincial Capital Cities in 2000–2020

Trojanek

2021

International Journal of Strategic Property Management

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Using a unique dataset of 4,5 million offers, the housing cycles in 18 Polish provincial capitals were identified between 2000 and 2020 before and after the financial crisis. Differences in the course of the cycles depending on spatial diversity are presented, as well as differences in the strength of decreases and increases in individual phases. The examined housing markets in Poland have experienced significant variability in the extent of their cycles. One complete cycle was found in each of the analysed cities. Its average duration was approximately 12 years. In this cycle, residential prices (in real terms) increased by 88% on average, in the upward phase by 158%, while in the downward phase, they decreased by 27% in the cities under study. A correlation was found that implies that the higher the price rises in the upward period, the higher the price correction ensues in the cycle’s downward phase. Moreover, the similarity in fluctuations was present in the metropolitan markets in local housing markets, especially before the financial crisis. Apartment prices continued to grow by 2.9% on average in the real term during the COVID-19 pandemic in 2020.

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Do house prices impact business starts?

Cited by 7 publications

References 17 publications

The effect of house prices on business start-ups: A review and analysis using Swedish regional data

The effect of house prices on business start-ups: A review and analysis using Swedish regional data

Urban house prices and investments in small and medium-sized industrial firms: Evidence from provinces of Iran

Housing Price Cycles in Poland – The Case of 18 Provincial Capital Cities in 2000–2020

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