Housing Market Dynamics and the GFC: The Complex Dynamics of a Credit Shock
Motu Working Paper 13-12, Motu Economic and Public Policy Research
39 Pages Posted: 16 Oct 2013
Date Written: October 13, 2013
Abstract
We analyse the multiple channels of influence that GFC-induced credit restrictions had on New Zealand’s subnational housing markets. Our model isolates dynamics caused by impacts on the supply and the demand sides of the market. These dynamics are compared to those caused by a migration shock, a more common form of housing shock in New Zealand. We focus on the impacts on two outcome variables: house prices and housing supply; both shocks cause substantial cyclical adjustments in each variable. Similar cyclical dynamics could complicate the conduct of macro-prudential policies which are designed to affect bank credit allocation.
Keywords: House prices, housing supply, credit restrictions, GFC, migration
JEL Classification: E51, R21, R31
Suggested Citation: Suggested Citation