United Kingdom: Selected Issues

Publication Date:

March 3, 2003

Electronic Access:

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Summary:

This Selected Issues paper examines the factors determining housing prices in the United Kingdom. Based on econometric evidence, the paper assesses whether recent housing price increases can be explained by fundamentals or whether they represent a temporary overshooting of housing prices, characteristic of a bubble. The paper estimates a simple error-correction model that describes the dynamics of real housing prices since the 1970s. Estimation results suggest that earnings and interest rates are the key determinants of housing prices, and that changes in real housing prices exhibit a large degree of persistence.

Series:

Country Report No. 2003/047

Subject:

English

Publication Date:

March 3, 2003

ISBN/ISSN:

9781451814170/1934-7685

Stock No:

1GBREA0022003

Pages:

60

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