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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
Predicting Peaks and Troughs in Real House Prices
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- Linda Rousová1, Paul van den Noord
- Author Affiliations
- 1: OECD, France
- 13 July 2011
- Bibliographic information
OECD work prior to the financial crisis suggested that real prices in several housing markets had become vulnerable to a change in financial and economic conditions, with the risk of a subsequent downturn becoming increasingly possible, as proved to be the case. With corrections in many, but not all, housing markets having now occurred, and, in some countries, prices having rebounded rapidly in the low interest rate environment, the issue of whether prices are now close to another turning point is again of considerable policy interest. As a means of addressing this issue, probit models have been estimated to provide an indication of possible peaks and troughs in real house prices in 2011 and 2012, using data for 20 OECD countries. Predictions based on these models have been reported in OECD Economic Outlook, No. 89 and this paper provides information on the methodology underpinning these predictions.
- house prices, housing bubbles, business cycles
- JEL Classification:
- E32: Macroeconomics and Monetary Economics / Prices, Business Fluctuations, and Cycles / Business Fluctuations ; Cycles
- F42: International Economics / Macroeconomic Aspects of International Trade and Finance / International Policy Coordination and Transmission
- R31: Urban, Rural, Regional, Real Estate, and Transportation Economics / Real Estate Markets, Spatial Production Analysis, and Firm Location / Housing Supply and Markets