Housing Price and Household Debt Interactions in Sweden

Turk, Rima

doi:10.5089/9781513586205.001

Cited by 31 publications

(31 citation statements)

References 33 publications

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“…In contrast, other empirical studies have found evidence of bubbles, e.g. Turk (2015), the European Commission Report (2016), the IMF (2016) and UBS (2016) for Sweden; Case and Shiller (2003), Wheaton and Nechayev (2008), Bourassa et al (2016) and Nneji et al (2013) for the USA; Oikarinen (2009) for Helsinki, Black et al (2006) for the UK; and Ambrose et al (2013) for Amsterdam.…”

Section: Introductionmentioning

confidence: 89%

Is there a bubble in the Swedish housing market?

Asal

2019

JERER

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Purpose This paper aims to investigate the presence of a housing bubble using Swedish data from 1986Q1-2016Q4 by using various methods. Design/methodology/approach First, the authors use affordability indicators and asset-pricing approaches, including the price-to-income ratio, price-to-rent ratio and user cost, supplemented by a qualitative discussion of other factors affecting house prices. Second, the authors use cointegration techniques to compute the fundamental (or long-run) price, which is then compared with the actual price to test the degree of Sweden’s housing price bubble during the studied period. Third, they apply the univariate right-tailed unit root test procedure to capture bursting bubbles and to date-stamp bubbles. Findings The authors find evidence for rational housing bubbles with explosive behavioral components beginning in 2004. These bubbles do not continuously diverge but instead periodically revert to their fundamental value. However, the deviation is persistent, and without any policy correction, it takes decades for real house prices to return to equilibrium. Originality/value The policy implication is that monetary policy designed to contain mortgage demand and thereby prevent burst episodes in the housing market must address external imbalances, as revealed in real exchange rate undervaluation. It is unlikely that current policies will stop the rise of house prices, as the growth of mortgage credit, improvement in Sweden’s international competitiveness and the path of interest rates are much more important factors.

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Section: Introductionmentioning

confidence: 89%

Is there a bubble in the Swedish housing market?

Asal

2019

JERER

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“…This is in line with Nizar's (2015) findings that housing prices are significant, thus the increase in housing prices will further increase debt. Another study done by Turk (2015) found that growth in housing prices will moderate to be broadly in line with household debt growth. This result is supported by Jacobsen & Naug (2004) who found that household debt may increase further because higher house prices may result in higher final wealth and better borrowing conditions.…”

Section: Concept Of House Price Index With Household Debtmentioning

confidence: 94%

“…The result showed that developments in the short run are influenced by changes in long term interest rates, and declines in interest rates explain the expansion of households' borrowed funds. Turk (2015) stated that declining interest rates also explain the rise of household debt in Sweden. This result is supported by Mutezo (2015) who revealed evidence of the existence of a long run relationship between household debt and interest rates.…”

Section: Concept Of Household Debtmentioning

confidence: 99%

Household Debt and Macroeconomic Variables in Malaysia

Ma’in¹,

Tajuddin²,

Nathan³

2016

European Proceedings of Social &Amp; Behavioural Sciences

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The rise of household debt in Malaysia has caused consternation since it has almost reached 89.1% of total GDP. The level of household debt is deemed to be at worrying stage as it may trigger another financial crisis. The purpose of this study is to examine factors that influence household debt in Malaysia via time series data. This study employs the ordinary least square (OLS) method and the macroeconomic variables used consist of base lending rate, housing price index, gross domestic product and unemployment as independent variables taken in the period from quarter one 2008 to quarter four 2015. The results show that the housing price index is the most significant variable, followed by base lending rate, unemployment and gross domestic product. House pricing index and gross domestic product show positive relationships with household debt, which indicates that the rise of household debt is determined by the rise of these explanatory variables. However, base lending rate and unemployment are found to have negative effects on the rise of household debt. The data are taken from Bank Negara Malaysia report, National Property Information Centre (NAPIC) and Asia Regional Integration Centre.

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“…Some studies Þ nd a cointegrating relationship between real house prices and their fundamentals (e.g. Gerlach and Peng, 2005;Gimeno and Martínez-Carrascal, 2006;Égert and Mihaljek, 2007;Oikarinen, 2009;Holly et al 2010;Gattini and Hiebert, 2010;Corradin and Fontana, 2013;Liu, 2015;Turk, 2015;Kulikauskas, 2016), others do not (e.g. Malpezzi, 1999;Gallin, 2006;Zhou and Sornette, 2006;Mikhed and Zem ík, 2009;Clark and Coggin, 2011).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Majority of the studies concentrate either on a single country (e.g. Gimeno and Martínez-Carrascal, 2006;Oikarinen, 2009;Turk, 2015), a panel limited to a fraction of euro area countries (Annett, 2005;European Commission, 2012;Kulikauskas, 2016;Zhu et al, 2017) 10 or analyze aggregated euro area time series (Gattini and Hiebert, 2010).…”

Section: Literature Reviewmentioning

confidence: 99%

House prices in the euro area

Dajčman

2019

Ekon. pregl. (Online)

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The paper aims to assess whether Þ nancial market stress is associated with real house prices in the euro area. Building on the theory of house prices fundamentals, we Þ rst apply the second generation cointegration tests and reject a stable long-run relationship between house prices and the variables identiÞ ed in the theory as their main determinants (fundamentals). Short-run panel data models are then estimated, relating real house prices to their fundamentals and the Þ nancial market stress. The results imply that the real GDP per capita growth rate and the loans to households for house purchase are the main determinants of real house prices growth in the short run. Financial market stress is signiÞ cantly associated with real house prices changes only in some euro area countries. Different panel data estimators are used to show that heterogeneity and cross-section dependence needs to be accounted for to obtain robust estimates. The differences between two group of euro area countries (the PIIGS and the non-PIIGS euro area) are also compared.

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Housing Price and Household Debt Interactions in Sweden

Cited by 31 publications

References 33 publications

Is there a bubble in the Swedish housing market?

Is there a bubble in the Swedish housing market?

Household Debt and Macroeconomic Variables in Malaysia

House prices in the euro area

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