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History dependence in the housing market

Bracke, Philippe and Tenreyro, Silvana (2018) History dependence in the housing market. CEP Discussion Papers (CEPDP1568). Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

Using data on the universe of housing transactions in England and Wales over a twenty-year period, we document a robust pattern of history dependence in housing markets. Sale prices and selling propensities are affected by house prices prevailing in the period in which properties were previously bought. We investigate the causes of history dependence complementing our analysis with administrative data on mortgages and online house listings, which we match to actual sales. We find that cognitive and financial frictions explain the history dependence in the data. Both contributed to the collapse and slow recovery of the volume of housing transactions in the post-crisis period.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/
Additional Information: © 2018 The Authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HC Economic History and Conditions
JEL classification: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E30 - General
R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R21 - Housing Demand
R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R31 - Housing Supply and Markets
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 11 Jan 2019 11:01
Last Modified: 20 Feb 2019 04:09
Funders: Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/91690

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