A platform for research: civil engineering, architecture and urbanism
A platform for research: civil engineering, architecture and urbanism
Booms and busts: consumption, house prices and expectations
Over much of the past 25 years, the cycles of house price and consumption growth have been closely synchronised. Three main hypotheses for this co-movement have been proposed in the literature. First, that an increase in house prices raises households’ wealth, particularly for those in a position to trade down the housing ladder, which increases their desired level of expenditure. Second, that house price growth increases the collateral available to homeowners, reducing credit constraints and thereby facilitating higher consumption. And third, that house prices and consumption have tended to be influenced by common factors. This paper finds that the relationship between house prices and consumption is stronger for younger than older households, which appears to contradict the wealth channel. These findings therefore suggest that common causality has been the most important factor behind the link between house price and consumption.
Booms and busts: consumption, house prices and expectations
Over much of the past 25 years, the cycles of house price and consumption growth have been closely synchronised. Three main hypotheses for this co-movement have been proposed in the literature. First, that an increase in house prices raises households’ wealth, particularly for those in a position to trade down the housing ladder, which increases their desired level of expenditure. Second, that house price growth increases the collateral available to homeowners, reducing credit constraints and thereby facilitating higher consumption. And third, that house prices and consumption have tended to be influenced by common factors. This paper finds that the relationship between house prices and consumption is stronger for younger than older households, which appears to contradict the wealth channel. These findings therefore suggest that common causality has been the most important factor behind the link between house price and consumption.
Booms and busts: consumption, house prices and expectations
Attanasio, O.P. (author) / Blow, L. (author) / Hamilton, R. (author) / Leicester, A. (author)
2005-11-01
(IFS Working Papers W05/24). Institute for Fiscal Studies: London, UK. (2005)
Paper
Electronic Resource
English
DDC:
720
A mechanism for booms and busts in housing prices
| DataCite | 2012
The Bay Area's Booms and Busts
| British Library Online Contents | 2003
Financial transformation and the metropolis: Booms, busts, and banking in Los Angeles
| Online Contents | 1996
Back to the Future: Agricultural Booms, Busts, and Diversification in Maine, USA, 1840–2017
| DOAJ | 2022