Don't Look Up: House Prices in Emerging Europe

Author/Editor:

Serhan Cevik ; Sadhna Naik

Publication Date:

December 2, 2022

Electronic Access:

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Summary:

This paper investigates how housing prices respond to economic, financial and demographic conditions in emerging markets in Europe. We use quarterly data covering 10 countries over the period 1998–2022 and implement a panel quantile regression approach to obtain a granular analysis of real estate markets. Overall, economic, financial and demographic factors explain the changes in real house prices in emerging Europe, with income growth having the most significant impact. Quantile regression estimations show that income growth matters more for higher housing prices than those at the lower quantiles of the property market. We also find that an increase in short-term or long-term interest rates have a price-dampening impact, indicating that a higher cost of borrowing is associated with lower real house prices. These results indicate that the downturn in house prices could deepen with the looming economic recession and soaring interest rates.

Series:

Working Paper No. 2022/236

Frequency:

regular

English

Publication Date:

December 2, 2022

ISBN/ISSN:

9798400227042/1018-5941

Stock No:

WPIEA2022236

Pages:

23

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