Andrés Rodríguez-Pose, Michael Storper, 02 October 2019

A dominant view in urban economics suggests that the solution to the housing crisis of major cities is to relax zoning and other planning regulations. This column challenges this position, arguing that there is no clear and uncontroversial evidence that housing regulation is a principal source of differences in home availability or prices across cities and that these issues are more linked to rising inequalities in the geography of employment, wages and skills. Blanket changes in zoning are unlikely to increase affordability for lower-income households in prosperous regions, but would increase gentrification without appreciably decreasing income inequality.

Jean-Charles Bricongne, Alessandro Turrini, 21 August 2019

The increased post-Global Crisis monitoring of house prices still lacks an effective measure for cross-country comparisons. This column outlines the creation of an integrated database covering advanced and emerging economies on the price per square metre of housing. The model shows that price-to-income ratios vary substantially at the extremes, but that the majority economies converge around the median level. Country rankings based on housing prices in euros versus PPP also vary significantly.

Jane Kelly, Julia Le Blanc, Reamonn Lydon, 25 November 2018

Loan-to-value limits and other borrower-based macroprudential measures are now used in two-thirds of advanced economies. This column uses survey data to document changes in credit standards in a cross-section of countries in the run-up to, and aftermath of, the financial crisis. There is clear evidence of laxer credit standards in countries that experienced a real estate boom-bust, and a significant tightening after the bust. The results imply that compared to earlier years, younger and lower-income borrowers have to save for longer before buying.

Jagjit Chadha, 29 October 2018

Jagjit Chadha, Director of the National Institute of Economic and Social Research, describes the main themes explored in the August 2018 issue of the NIESR Economic Review, dedicated to 'Housing and the Economy'.

Alberto Martin, Enrique Moral-Benito, Tom Schmitz, 11 September 2018

Housing bubbles may crowd out credit from other sectors, but they may also have a crowding-in effect by providing collateral to real estate-owning firms or generating attractive assets which banks can securitise and use to increase their credit supply. This column applies data from the Spanish housing bubble to a simple model of a closed economy to show that both effects were present. At first, the crowding-out effect dominated, but then crowding in occurred. This model can be applied to similar positive shocks in other sectors.

Isaiah Hull, Conny Olovsson, Karl Walentin, Andreas Westermark, 23 August 2018

Large movements in house prices can have broad and substantial effects on the macroeconomy. This column uses property-level data to identify the key drivers of house price volatility and decompose this into national, regional, local, and idiosyncratic components. There is substantial cross-sectional variation in house price risk, with higher firm concentration, employment volatility, and manufacturing share of output and employment associated with greater risk. 

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The European Association of Young Economists (EAYE), in collaboration with Leipzig University, is pleased to announce that the 1st EAYE Workshop will take place at Leipzig University on September 10-11, 2018.

Since the Great Recession, research on housing and macroeconomics has become a highly relevant and vibrant research field within macroeconomics. What drives house-price fluctuations? How do pronounced fluctuations in house prices and housing credit affect the real economy? What explains the long run dynamics of house prices? The aim of the workshop is to bring together young economists, as well as a few distinguished senior researchers, that work on these pressing questions and on housing and macroeconomics in general.

We are delighted to announce that two keynote lectures will be given by Alberto Martín (CREI, Universitat Pompeu Fabra, Barcelona GSE, CEPR) and Moritz Schularick (University of Bonn, CEPR).

The submission deadline is June 7, 2018.

David Miles, 23 March 2018

The housing market faces major challenges in both the short and long run in terms of affordability, price variability, ownership structures, financing, and their impacts upon wider macroeconomic stability. This column summarises a conference on lessons for the future of housing, jointly organised by the Brevan Howard Centre for Financial Analysis at Imperial College Business School and CEPR.

Òscar Jordà, Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick, Alan Taylor, 02 January 2018

The rate of return on capital plays a pivotal role in shaping current macroeconomic debates. This column presents findings from a new dataset covering returns of major asset classes in the advanced economies over the last 150 years. The data offer new insights on several long-standing puzzles in economics, and uncover new relationships that seem at odds with some fundamental economic tenets. 

Gabriel Ahlfeldt, Daniel McMillen, 04 November 2017

Cities around the world are experiencing unprecedented vertical growth, but there has been little study of the economics of tall buildings. This column summarises novel evidence on the determinants of the urban height profile and the cost of building tall, and derives implications for urban theory and policy. In contrast to standard urban economics models, there is a role for the supply side in determining horizontal land use patterns. Vertical expansion is unlikely to resolve affordability problems in growing cities.

Shang-Jin Wei, 01 November 2017

Could the housing prices in China crash? In this video, Shang-Jin Wei explains whiat are the potential concerns, and how the Chinese government could mitigate them. This video was recorded at the "10 years after the crisis" conference held in London, on 22 September 2017.

Stefania Albanesi, Giacomo De Giorgi, Jaromir Nosal, 03 October 2017

The Global Crisis narrative has suggested that an expansion of subprime credit was the reason for rising mortgage defaults, leading to the large-scale recession in 2007-09. Taking a closer look at the characteristics of subprime credit holders over the period, this column argues that the growth in mortgage defaults did not occur predominantly amongst subprime credit holders. Instead, it was real estate investors that played a critical role in the rise in mortgage debt, specifically among the middle and the top of the credit score distribution.

Mojmir Hampl, Tomas Havranek, 12 September 2017

Seven out of every ten Europeans live in their own homes, yet Europe’s most important inflation measure excludes the costs associated with owner-occupied housing. This column argues that including the costs of home ownership would prove beneficial to the conduct of monetary and macroprudential policy. It would also bring the measure closer to what most people consider inflation to be.

Stéphane Bonhomme, Laura Hospido, 04 September 2017

The link between the rise in unemployment and the housing market in the US during the Great Recession is well documented. This column shows that in the case of Spain, the rise and fall in demand for construction workers following developments within the housing market had a big impact earnings inequality as well as employment. While there has been no apparent trend in the recent evolution of earnings inequality in Spain, countercyclical fluctuations have been substantial, with the construction sector playing a key role in this.

Filipa Sá, 04 January 2017

One of the factors driving house price growth in many countries is foreign investor demand. Using new UK data, this column argues that foreign investment has had a significant positive effect on house price growth in the last 15 years. The effect is not limited to expensive homes but ‘trickles down’ to less expensive properties, and is stronger where housing supply is less elastic. Foreign investment is also found to reduce the rate of home ownership, but there is no evidence of an effect on the housing stock or share of vacant homes.

Olympia Bover, Jose Maria Casado, Sónia Costa, Philip Du Caju, Yvonne McCarthy, Eva Sierminska, Panagiota Tzamourani, Ernesto Villanueva, Tibor Zavadil, 08 November 2016

Household micro-data reveal striking differences in secured debt holdings across Eurozone countries. This column presents new evidence on the role of household characteristics and country institutions in accounting for the cross-country patterns observed. In countries with lengthier asset repossession periods, young or low-income households face higher borrowing costs, leading to a lower probability of holding mortgages.

Gianni La Cava, 08 October 2016

The rising share of income accruing to housing is a key feature of the changing US income distribution. This column examines the determinants of this phenomenon. The rise occurred due to an increasing share of income accruing to owner-occupiers through imputed rent, it is concentrated in states that are constrained in terms of new housing supply, and it is closely associated with the long-run decline in real interest rates and inflation.

Ivan Lopez Cruz, Sebastian Galiani, Gustavo Torrens, 24 May 2016

A large empirical literature has revealed the effects of preventative and punitive measures on crime. This column examines the effects of police deployment strategies, comparing geographically concentrated protection with evenly dispersed protection across a city. The results suggests that when considering changes in the geographic distribution of police forces, we should take into account the effects on house prices and on reallocation of the population, as well as the overall effect on crime in the entire city. 

Richard Blundell, Rowena Crawford, Eric French, Gemma Tetlow, 11 May 2016

Housing forms a large share of household wealth in many nations. Using comparable data for the US and England, this column argues that the nature of housing as an asset – its utility value, illiquidity, and mix of risk and returns – is an important factor in explaining the trajectory of wealth in retirement. 

Thomas Hintermaier, Winfried Koeniger, 09 January 2016

Crises of confidence turn booms into busts. Bloated household balance sheets and high debt offer the right ingredients for a confidence-driven housing bust. This column develops an analytic framework that accommodates the potential role of confidence fluctuations as a source of uncertainty in the economy. Current debt levels are shown to determine the exposure to crises of confidence. The results point to a clear role for macroprudential policy in the prevention of such crises. 

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