A Repayment Model of House Prices
نویسنده
چکیده
This paper proposes a model in which house prices are determined by housing affordability in the short run, while being determined by acquisition costs in the long run. Housing affordability is, in turn, determined by nominal income and nominal mortgage payments. The model explains the recent housing market run-up by lower housing repayment, decreasing nominal interest rates, and a large inflow of migrants. Empirical estimates give strong support for the model.
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