The interaction between house prices and loans for house purchase: the spanish case

• Autores: Carmen Martínez Carrascal, Ricardo Gimeno
• Localización: Documentos de trabajo - Banco de España, ISSN 0213-2710, Nº 5, 2006, págs. 9-51
• Idioma: inglés
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• Resumen

  • The aim of this paper is to analyse, using a vector error-correction model (VECM), the dynamic interaction between house prices and loans for house purchase in Spain. The results show that both variables are interdependent in the long run: loans for house purchase depend positively on house prices, while house prices adjust when this credit aggregate departs from the level implied by its long-run determinants. In contrast, disequilibria in house prices are corrected only through changes in this variable. As for short-run dynamics, the results show that the two variables have a positive contemporaneous impact on each other, indicating the existence of mutally reinforcing cycles in both variables.