Cookies?
Library Header Image
LSE Research Online LSE Library Services

History dependence in the housing market

Bracke, Philippe and Tenreyro, Silvana (2020) History dependence in the housing market. American Economic Journal: Macroeconomics. ISSN 1945-7707

[img] Text (history dependence in the housing market) - Accepted Version
Download (574kB)

Abstract

Using the universe of housing transactions in England and Wales in the last twenty years, we document a robust pattern of history dependence in housing mar- kets. Sale prices and selling probabilities today are affected by aggregate house prices prevailing in the period in which properties were previously bought. We investigate the causes of history dependence, with its quantitative implications for the post-crisis recovery of the housing market. To do so we complement our analysis with administrative data on mortgages and online house listings, which we match to actual sales. We find that high leverage in the pre-crisis period and anchoring (or reference dependence) both contributed to the collapse and slow recovery of the volume of housing transactions. We find no asymmetric effects of anchoring to previous prices on current transactions; in other words, loss aversion does not appear to play a role over and above simple anchoring.

Item Type: Article
Official URL: https://www.aeaweb.org/journals/mac
Additional Information: © 2020 American Economic Association
Divisions: Geography & Environment
Spatial Economics Research Centre
Economics
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > H Social Sciences (General)
Date Deposited: 16 Jan 2020 15:39
Last Modified: 14 Sep 2020 09:30
URI: http://eprints.lse.ac.uk/id/eprint/103079

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics