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Housing Purchases and the Dynamics of Housing Wealth

43 Pages Posted: 18 Dec 2010  

Olympia Bover

Banco de España - Research Department; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: December 16, 2010


I model the purchase behavior of main and secondary housing by Spanish households using the panel sample from the first two waves of the Spanish household finance survey (EFF). I estimate discrete hazard models using retrospective and within-period purchase sequences. I also estimate an (S,s) model combining transactions data with longitudinal information on household wealth and housing stock values. I look at the role of adaptive expectations about the rate of return on housing and find they have a positive and significant effect on the demand for houses. This is true for historical and within-period purchase probabilities as well as for the target ratio of housing wealth to total wealth. The volatility of house price growth has a negative effect on purchases for investment but a positive one on purchases for consumption.

Keywords: Household finance, house purchases, secondary homes, housing returns, adaptive expectations, (S,s) rule

JEL Classification: D14, G11

Suggested Citation

Bover, Olympia, Housing Purchases and the Dynamics of Housing Wealth (December 16, 2010). Banco de Espana Working Paper No. 1036. Available at SSRN: or

Olympia Bover (Contact Author)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Banco de España - Research Department ( email )

Alcala 50
28014 Madrid
+34 91 338 5979 (Phone)
+34 91 338 5678 (Fax)

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