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What is driving house prices in Stockholm?
Stockholm University, Faculty of Social Sciences, Department of Economics.
2016 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

An increased mortgage cap was introduced in 2010, and as of May 1st 2016 an amortization requirement was introduced in an attempt to slow down house price development in Sweden. Fluctuations in the house prices can significantly influence macroeconomic stability, and with house prices in Stockholm rising even more rapidly than Sweden as a whole makes the understanding of Stockholm’s dynamics very important, especially for policy implications. Stockholm house prices between the first quarter of 1996 and the fourth quarter of 2015 is therefore investigated using a Vector Error Correction framework. This approach allows a separation between the long run equilibrium price and short run dynamics. Decreases in the real mortgage rate and increased real financial wealth seem to be most important in explaining rising house prices. Increased real construction costs and increased real disposable income also seem to have an effect. The estimated models suggest that around 40-50 percent, on average, of a short-term deviation from the long-run equilibrium price is closed within a year. As of the last quarter 2015, real house prices are significantly higher compared to the long run equilibrium price modeled. The deviation is found to be around 6-7 percent.

Place, publisher, year, edition, pages
2016. , 47 p.
Keyword [en]
House prices, Vector error correction, Error correction, co-integration, overvaluation, long run equilibrium
National Category
Economics
Identifiers
URN: urn:nbn:se:su:diva-130692OAI: oai:DiVA.org:su-130692DiVA: diva2:931763
Supervisors
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Available from: 2017-10-30 Created: 2016-05-30 Last updated: 2017-10-30Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
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  • Other locale
More languages
Output format
  • html
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  • asciidoc
  • rtf