Price Expectations, Distressed Mortgage Markets and the Housing Wealth Effect

36 Pages Posted: 19 Apr 2017

See all articles by Yvonne McCarthy

Yvonne McCarthy

Central Bank of Ireland

Kieran McQuinn

Central Bank and Financial Services Authority of Ireland

Date Written: Summer 2017

Abstract

Using a unique combination of regulatory and survey microdata, we examine the importance of the life cycle theory of consumption in estimating housing wealth effects for the Irish mortgage market. Since the recent financial crisis, this market has experienced substantial house price declines and negative equity. Thus, house price expectations are likely to be important in influencing housing wealth effects. We find a positive correlation between consumption and changes in housing wealth among our sample of mortgaged Irish households. Furthermore, we find that this positive association only exists when housing wealth changes are perceived to be of a permanent nature.

Suggested Citation

McCarthy, Yvonne and McQuinn, Kieran, Price Expectations, Distressed Mortgage Markets and the Housing Wealth Effect (Summer 2017). Real Estate Economics, Vol. 45, Issue 2, pp. 478-513, 2017, Available at SSRN: https://ssrn.com/abstract=2954807 or http://dx.doi.org/10.1111/1540-6229.12125

Yvonne McCarthy (Contact Author)

Central Bank of Ireland ( email )

P.O. Box 559
Dame Street
Dublin, 2
Ireland

Kieran McQuinn

Central Bank and Financial Services Authority of Ireland ( email )

P.O. 559 Dame Street
Dublin 2, D2
Ireland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2
Abstract Views
268
PlumX Metrics