Assessing Explanatory Power of Household Debt for House Prices
Assessing Explanatory Power of Household Debt for House Prices

Summary/Abstract: This paper contributes to the evidence that household credit relative to dis-posable income is a useful factor to inform house prices. This finding is observable both from persistent direct link between the two variables as well as from the relationship of credit with a residual of house price valuation equation. The latter has capacity also in its simplest form to identify overvaluation or undervaluation of property prices and relate them to actual market corrections observable over the post-crisis period in individual countries.

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