Digital library of construction informatics and information technology in civil engineering and construction
 
ITC
Digital library
SciX
Tower of Babel
Home All papers Browse by series Browse by authors Browse by keywords Browse by years
Paper: eres2004_122
Paper title: A dynamic equilibrium between house price interest payments and income
Authors: de Vries, Paul; Boelhouwer, Peter
Summary: The literature on housing markets suggests that house prices in almost all western economies can be explained only by demand-oriented variables. Particular attention is devoted to the speculative or psychological effects. When prices continue to increase, consumers speculate on further rises and act swiftly. Models have been compiled of these short-run price fluctuations, or ‘shocks’, based on recent price developments. The terms ‘bubble builder’ and ‘bubble burster’ are often used in this context. However, other more permanent factors play a role in the development of house prices. Many analytical models include income, inflation and mortgage interest payments as explanatory variables for house price trends. To ensure that long-term price developments can be explained by permanent factors, these models incorporate the deviation from price equilibrium, with the permanent characteristics as the corrective variable (error-correction models). This ‘long-run equilibrium’ is usually expressed as a price-to-income ratio. This paper seeks to identify a long-run equilibrium between mortgage interest payments and household income in the Netherlands. We consider both a static equilibrium and a dynamic equilibrium. We conclude that interest payments do appear to be linked to income levels.
Type:
Year of publication: 2004
Keywords: House Price; Interest payments; Error-correction model
Series: ERES:conference
Download paper:
Citation: de Vries, Paul; Boelhouwer, Peter (2004). A dynamic equilibrium between house price interest payments and income. 11th European Real Estate Society Conference (2-5 June 2004) Milano, Italy, http://itc.scix.net/paper/eres2004_122
hosted by University of Ljubljana University of Ljubljana

includes:

CIB
W78

ECCE

ITcon
© itc.scix.net
inspired by SciX, ported by Robert Klinc [2019]