House Prices and Affordability: A First and Second Look Across Countries
||Brounen, Dirk; Peter Neuteboom and Arjen van Dijkhuizen
||House Prices and Affordability: A First and Second Look Across Countries
||Book of Abstracts: 2005 European Real Estate Society conference in association with the International Real Estate Society
||In this paper we analyze the development of house prices for ten different countries over the period 1970-2004. First we look at real house price dynamics of the United States, the United Kingdom, France, Germany, Italy, Sweden, Denmark, the Netherlands, Ireland and Belgium. After discussing the observable similarities and variations in national house prices, we continue by analyzing structural differences in legislation and mortgage markets, which might help us to understand the cross-sectional variation in prices levels and price developments. Next, we construct a comprehensive affordability model in which nominal house prices are corrected for household income changes and the financing costs of mortgage payments. This model grants us a second look on the cross-section of international house price dynamics. We finish our study with elasticity tests, which give a first glance on the stability of each price level on the basis of affordability.
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