Borrowing Constraints and Housing Price Expectations in the Euro Area

40 Pages Posted: 8 Sep 2015

See all articles by Miguel Ampudia

Miguel Ampudia

European Central Bank (ECB) - Directorate General Research

Sergio Mayordomo

Banco de España

Date Written: June 30, 2015

Abstract

This paper analyzes the importance of financial constraints on the home ownership decision of European households and their differential effect in periods of positive expectations of housing prices. We document that financial constraints are key drivers of the household home ownership decision being wealth constraints more relevant than income constraints. The wealth constraint is less binding under a scenario in which housing prices exhibit an upward trend.

Suggested Citation

Ampudia, Miguel and Mayordomo, Sergio, Borrowing Constraints and Housing Price Expectations in the Euro Area (June 30, 2015). Available at SSRN: https://ssrn.com/abstract=2657176 or http://dx.doi.org/10.2139/ssrn.2657176

Miguel Ampudia

European Central Bank (ECB) - Directorate General Research ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

Sergio Mayordomo (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

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