Notes 3

From Hot and Cold Housing Markets: International Evidence

Jose Ceron, Omega Capital and Javier Suarez CEMFI, CEPR and ECGI

The studies by Englund and Ioannides (1997), Capozza et al. (2002), Tsatsaronis and Zhu (2003), and Borio and Mcguire (2004), among others, report significant correlations between real housing price growth and variables such as real GDP, unemployment, interest rates, and inflation, which suggests that property prices might feature a cyclical pattern, if only because of the convolution of the cyclicality of the other variables. Finally, swings in housing prices have been shown to be positively correlated with the volume of transactions (Stein, 1995) and negatively correlated with average selling times (Krainer, 2001).