IMF Working Papers

Don't Look Up: House Prices in Emerging Europe

By Serhan Cevik, Sadhna Naik

December 2, 2022

Download PDF

Preview Citation

Format: Chicago

Serhan Cevik, and Sadhna Naik. Don't Look Up: House Prices in Emerging Europe, (USA: International Monetary Fund, 2022) accessed December 24, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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.

Keywords: Emerging markets, Europe, House prices, Instrumental variable, Quantile regression

Publication Details

  • Pages:

    23

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2022/236

  • Stock No:

    WPIEA2022236

  • ISBN:

    9798400227042

  • ISSN:

    1018-5941