engleski

Confidence Vs. Uncertainty: An Explanation Of Housing Prices In The Old Eu Member States

This paper aims to shed some light on the soft data determinants of real housing prices in 14 developed European economies. Acknowledging heterogeneity and interdependence between the national real estate markets and their determinants, we apply a heterogeneous panel Granger causality test which allows for cross-sectional dependence. We discriminate between two groups of survey-based indicators: economic confidence and uncertainty. Results show that confidence exhibits a very strong short-run impact on house prices in the European economies. Uncertainty indicators, on the other hand, are mostly not significant. Our findings identify the construction sector confidence indicator as the relative “winner” of this empirical analysis, suggesting that the forecasting models of real housing prices should be augmented by the stated indicator.

housing prices ; real estate market ; business and consumer surveys ; economic uncertainty ; economic policy uncertainty index

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