Housing Markets and Intra-Euro Area Macroeconomic Imbalances: Identifying Policy Instruments

Main objective of the study is to detect the causes of imbalances on residential property and housing finance markets in order to define policy instruments that help preventing the emergence of market imbalances, dampening excess volatility and reducing imbalances if they have already occurred. The analysis applies a country-specific perspective since national housing markets and housing finance markets have very different structures and institutional/regulatory frameworks. Against this background, first aim of the study is to identify structural features of housing markets that are prone to produce frequent and substantial deviations of house prices from their fundamental values. Based on these findings, the study aims to derive country specific policy instruments that are suitable to stabilize housing markets. The analysis covers the Euro area countries Germany, Italy, France, Spain, Greece, Portugal, Netherlands, Ireland as well as the United Kingdom, Denmark and Sweden, United States, Japan Australia and Canada.

Kappler, Marcus, Tim-Alexander Kröncke, Felix Schindler, Frauke Schleer, Atilim Seymen and Peter Westerheide (2011), Housing Markets and Intra-Euro Area Macroeconomic Imbalances: Identifying Policy Instruments, European Commission - Directorate General for Economic and Financial Affairs (DG ECFIN), Mannheim