engleski

House Price Rises in Transition and EU-15 Countries: Same Causes, Different Outcomes?

This paper studies the house price developments in six European countries: Croatia, Estonia, Poland, Ireland, Spain and the United Kingdom. The main goal is to explore the factors driving the rise of the house prices in transition countries. Due to the fact that house price increases in the last two decades are not idiosyncratic to transition countries, the analysis is extended to three EU-15 countries that have recorded house price hikes. In such a way, the similarities and differences between two groups of countries regarding the house prices determinants can be explored. In the first part of the empirical analysis VAR is applied, in order to detect how GDP, housing loans, interest rates and construction contribute to the real house price variance. In the second part of the analysis, multiple regression models are estimated. The results of both methods suggest that the driving force behind house price inflation in both group of countries are very similar and encompass combined influence of the house price persistence, income and interest rates.

house prices; modelling; transition; VAR; general-to-specific

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