Housing Markets, Wealth and the Business Cycle

Abstract

The paper examines the linkages between housing markets and the business cycle in OECD countries, focusing on how differences in the degree of resilience to economic shocks can be affected by the structural characteristics of housing and mortgage markets. The paper focuses specifically on: the transmission channel from housing wealth to consumption and on the factors behind house price variability, which help to determine whether the housing sector plays a stabilising role or not. Estimates of the marginal propensity to consume out of housing wealth are presented for ten OECD countries, where it is found that the strongest impact on consumption is in countries that have large, efficient and responsive mortgage markets. Particularly important in this regard is the degree of mortgage market “completeness” -- i.e. the extent to which the market is able to offer a variety of products and to serve a broad range of potential borrowers -- in particular, the extent to which they provide ... Cette etude examine les liens entre les marches immobiliers et le cycle economique dans les pays de l’OCDE, se concentrant sur le role des specificites nationales des marches immobiliers et hypothecaires sur l’inegale resilience face aux chocs economiques. Cette etude s’interesse particulierement au canal de transmission de la richesse immobiliere a la consommation et aux facteurs expliquant la variabilite des prix des logements ; ces deux aspects contribuent a determiner si le secteur immobilier joue un role stabilisateur ou non. Des estimations de la propension marginale a consommer la richesse immobiliere sont presentees pour dix pays de l’OCDE. Ces estimations indiquent que les effets les plus important sur la consummation apparaissent dans les pays ayant des marches hypothecaires de grande taille, efficients et reactifs. Le niveau de « completude » du marche hypothecaire -- la mesure dans laquelle le marche peut offrir une variete de produits et repondre a un large eventail ...