Seminar " History dependence in the housing market: facts and explanations"

Time: 14.15-15.15 hours
Location: CPB-office, Bezuidenhoutseweg 30, Den Haag

Presentation: Phillipe Bracke (Bank of England)

Discussant: Benedikt Vogt (CPB)

Language: English

Registration:  Email Remco Mocking (r.mocking@cpb.nl).

Abstract subject:
Using the universe of housing market transactions in England and Wales in the last twenty years, we document a robust pattern of history dependence. Sale prices and selling probabilities today are affected by aggregate house prices prevailing in the period in which properties were bought. We investigate the causes of history dependence and the quantitative implications for the post-crisis recovery of the housing market. To do so we complement our analysis with administrative data on mortgages and online house listings, which we match to actual sales. We find that high leverage in the pre-crisis period and reference dependence played an important role in the collapse and slow recovery of the volume of housing transactions. Loss aversion, in contrast, played virtually no role, not least because the overall gains in values for most properties were positive during the period analyzed; moreover, for properties that registered losses, there is no evidence of asymmetric effects of history on prices or selling probabilities vis-à-vis gains.

Policy seminars
CPB organises policy seminars for policy makers, researchers and other stakeholders. These policy seminars focus on policy implications. Policy seminars are held on Thursday from 1.00 pm. to 2.00 pm.

Seminars
CPB also organises seminars for researchers. During these seminars, always held on Tuesday from 1.00 pm. to 2.00 pm., academic papers are presented and discussed.