THE RESPONSIVENESS OF HOUSE PRICES TO MACROECONOMIC FORCES: A CROSS-COUNTR Y COMPARISON

This paper examines housing markets in selected European Union countries and investigates the degree of similarity in housing market responses to changes in underlying demand- and supply-side variables. This may help to suggest how EU housing markets may be affected by a single monetary policy and whether housing market integration across the countries may be expected as a result of EMU. The choice of countries is explained followed by a description of the demand and supply characteristics of each country's housing markets. The paper then exploits a data set that has been constructed by combining data from each nation. Attention is paid to the statistical properties of variables used in estimations to construct accurate measurements to compare inter-country similarities/differences in housing market behaviour. The interaction of the housing market with the macroeconomy is then examined. The issue of monetary union and its impact on housing markets is discussed.