XXVI Edition

14-15-16 December 2017"

How do house prices respond to credit supply?

barone guglielmo , bank of italy
david francesco, bank of italy
De Blasio Guido, Bank of Italy
mocetti sauro, Bank of Italy

The paper is aimed at estimating the role of credit supply in explaining the dynamics of house prices. Banks’ lending policies can shape house prices in two ways: they influence the demand side through the mortgage supply to households and the supply side by financing building firms. For both types of loans, we build an exogenous data-driven indicator of credit supply stance and we examine the impact on house prices at the city level. We also explore differential effects between normal times and recessions and across cities characterized by different housing supply elasticity.

Area: Banking

Keywords: credit supply, house prices, housing demand, housing supply

Paper file

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