Explaining House Price Changes in Greece

Posted: 26 Nov 2010 Last revised: 26 May 2013

See all articles by Dimitrios Gounopoulos

Dimitrios Gounopoulos

University of Bath

Andreas G. Merikas

University of Piraeus

Anna Merika

American College of Greece (DEREE)

Anna Triantafyllou

American College of Greece (DEREE)

Date Written: November 23, 2010

Abstract

This paper develops an equilibrium model for the Greek housing market that incorporates both macroeconomic as well as country-specific variables that affect demand for and supply of houses. In the overall uprising phase of the 23-year period examined (1985Q1-2008Q1), our investigation of short-term fluctuations in real house prices and stock prices confirms the inverse relationship between movements in the housing price index and the stock exchange general index, identifies the direction of causality as running from the financial sector to the real sector, and finds that, following an exogenous shock, reversion to the long-run equilibrium is a rather slow process. Furthermore, we identify a fundamental shift in the behaviour of Greek homeowners, who appear to be moving away from the treatment of housing as consumption good, towards treating house purchases as investment.

Keywords: house price changes, construction costs, housing price index

JEL Classification: H31

Suggested Citation

Gounopoulos, Dimitrios and Merikas, Andreas G. and Merika, Anna and Triantafyllou, Anna, Explaining House Price Changes in Greece (November 23, 2010). Applied Financial Economics, Vol. 22, No. 4, 2012. Available at SSRN: https://ssrn.com/abstract=1714054

Dimitrios Gounopoulos (Contact Author)

University of Bath ( email )

School of Management,
Wessex House, Claverton Down
Bath, BA2 7AY
United Kingdom

Andreas G. Merikas

University of Piraeus ( email )

Piraeus, LA
Greece

Anna Merika

American College of Greece (DEREE) ( email )

Gravias 6,
Aghia Paraskevi
Athenes, 153-42
Greece

Anna Triantafyllou

American College of Greece (DEREE) ( email )

Gravias 6,
Aghia Paraskevi
Athenes, 153-42
Greece

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