Estimating a stock-flow model for the Swiss housing market
Swiss Journal of Economics and Statistics volume 146, pages 601–627 (2010)
This paper analyzes the development of housing market imbalances, housing prices and residential investment in Switzerland within a stock-flow framework. In the long run, the desired level of residential capital stock and the existing residential capital stock revert. Empirical results indicate, however, that housing demand can diverge from the existing supply for several years due to the slow adjustment of the residential capital stock to shocks. In the short run, the market therefore has to be cleared by price adjustments. And indeed, it can be shown empirically that changes in prices are significantly and strongly dependent on the level of stock imbalances. Furthermore, housing prices prove to be an important determinant of residential investment, which in turn drives the adjustment process of the residential capital stock towards its desired level.
Borio, Claudio, and Patrick McGuire (2004), “Twin Peaks in Equity and Housing Prices?”, BIS Quarterly Review, 7, pp. 79–96.
Borowiecki, Karol Jan (2009), “The Determinants of House Prices and Construction: An Empirical Investigation of the Swiss Housing Economy”, International Real Estate Review, 12 (3), pp. 193–220.
Bourassa, Steven, Martin Hoesli and Donato Scognamiglio (2009), “Housing Finance, Prices, and Tenure in Switzerland”, Research Paper 16, Swiss Finance Institute.
Demers, Frederick (2005), “Modelling and Forecasting Housing Investment: The Case of Canada”, Working Paper 2005-41, Bank of Canada.
DiPasquale, Denise, and William C. Wheaton (1994), “Housing Market Dynamics and the Future of Housing Prices”, Journal of Urban Economics, 35, pp. 1–27.
Goldsmith, Raymond W (1981), “A Tentative Secular National Balance Sheet for Switzerland”, Swiss Journal of Economics and Statistics, 117 (2), pp. 175–187.
Grimes, Arthur, and Andrew Aitken (2006), “Housing Supply and Price Adjustment”, Working Paper MWP0601, Motu Economic and Public Policy Research.
Hott, Christian (2009), “Explaining House Price Fluctuations”, Working Paper 2009-5, Swiss National Bank.
Iacoviello, Matteo, and Stefano Neri (2010), “Housing Market Spillovers: Evidence from an Estimated DSGE Model”, American Economic Journal: Macroeconomics, forthcoming.
Juselius, Katarina (2006), The Cointegrated VAR Model, Methodology and Applications, New York: Oxford University Press Inc.
McCarthy, Jonathan, and Richard W. Peach (2002), “Monetary Policy Transmission to Residential Investment”, FRBNY Economic Policy Review, 8 (1).
Peters, Matthias, and Bettina Wapf (2007), „Befragung von Schweizer Baugesuchstellern“, Die Volkswirtschaft, 80 (5).
Rais, Gregory, and Pierre Sollberger (2009), „Nichtfinanzieller Kapital-stock, Methodenbericht“, Working paper, Bundesamt für Statistik BFS.
Riddel, Mary (2004), “Housing-Market Disequilibrium: An Examination of Housing-Market Price and Stock Dynamics 1967–1998”, Journal of Housing Economics, 13 (2), pp. 120–135.
Rosenthal, Stuart S., John V. Duca and Stuart A. Gabriel (1991), “Credit Rationing and the Demand for Owner-occupied Housing”, Journal of Urban Economics, 30 (1), pp. 48–63.
Rudolf, Barbara, and Mathias Zurlinden (2009), “Measuring Capital Stocks and Capital Services in Switzerland”, Swiss Journal of Economics and Statistics, 145 (1), pp. 61–105.
Saurer, Peter (1996), „Der Investitionsbonus 1993–1995, Schlussbericht“, Mitteilungsblatt für Konjunkturfragen, 52 (3), pp. 3–16.
Topel, Robert, and Sherwin Rosen (1988), “Housing Investment in the United States”, The Journal of Political Economy, 96 (4), pp. 718–740.
van den Noord, Paul J. (2006), “Are House Prices Nearing a Peak? A Probit Analysis for 17 OECD Countries”, Working Paper 488, OECD Economics Department.
The author would like to thank Katrin Assenmacher, Sarah Lein, Angelo Ranaldo, Barbara Rudolf, Jonas Stulz, Caroline Schmidt, Peter Tillman, Attilio Zanetti, Mathias Zurinden and an anonymous referee for their valuable contribution to this paper.
About this article
Cite this article
Steiner, E. Estimating a stock-flow model for the Swiss housing market. Swiss J Economics Statistics 146, 601–627 (2010). https://doi.org/10.1007/BF03399329