Can Non-Interest Rate Policies Stabilise Housing Markets? Evidence from a Panel of 57 Economies
43 Pages Posted: 27 Feb 2014
Date Written: November 2013
Using data from 57 countries spanning more than three decades, this paper investigates the effectiveness of nine non-interest rate policy tools, including macroprudential measures, in stabilising house prices and housing credit. In conventional panel regressions, housing credit growth is significantly affected by changes in the maximum debt-service-to-income (DSTI) ratio, the maximum loan-to-value ratio, limits on exposure to the housing sector and housing-related taxes. But only the DSTI ratio limit has a significant effect on housing credit growth when we use mean group and panel event study methods. Among the policies considered, a change in housing-related taxes is the only policy tool with a discernible impact on house price appreciation.
Keywords: House prices, housing credit, financial stability, macroprudential policy
JEL Classification: G21, G28
Suggested Citation: Suggested Citation