A1 Refereed original research article in a scientific journal
Empirical evidence on the reaction speeds of housing prices and sales to demand shocks
Authors: Oikarinen E
Publisher: ACADEMIC PRESS INC ELSEVIER SCIENCE
Publication year: 2012
Journal: Journal of Housing Economics
Journal name in source: JOURNAL OF HOUSING ECONOMICS
Journal acronym: J HOUS ECON
Volume: 21
Issue: 1
First page : 41
Last page: 54
Number of pages: 14
ISSN: 1051-1377
DOI: https://doi.org/10.1016/j.jhe.2012.01.004
Abstract
This article studies the co-movement and dynamics between price movements and transactions in the housing market using data for the period 1988-2008 from Finland. While the previous related literature examines the reactions of sales and prices to an interest rate shock only, this study investigates the responses to income and debt shocks as well. The empirical estimations show that the response of prices to demand shocks is substantially slower than that of sales. The estimated reactions of sales substantially differ from those reported in the earlier literature. The reaction patterns can create the kind of strong positive co-movement between price movements and sales volume and the kind of negative correlation between price level and sales that have been found in several housing markets. (C) 2012 Elsevier Inc. All rights reserved.
This article studies the co-movement and dynamics between price movements and transactions in the housing market using data for the period 1988-2008 from Finland. While the previous related literature examines the reactions of sales and prices to an interest rate shock only, this study investigates the responses to income and debt shocks as well. The empirical estimations show that the response of prices to demand shocks is substantially slower than that of sales. The estimated reactions of sales substantially differ from those reported in the earlier literature. The reaction patterns can create the kind of strong positive co-movement between price movements and sales volume and the kind of negative correlation between price level and sales that have been found in several housing markets. (C) 2012 Elsevier Inc. All rights reserved.
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