Can non-interest rate policies stabilise housing markets? Evidence from a panel of 57 economies

Published in: Journal of Financial Stability, vol 26, October 2016, pp 31-44.

Using data from 57 countries spanning more than three decades, this paper investigates the effectiveness of nine non-interest rate policy tools, including macroprudential measures, in stabilising house prices and housing credit. In conventional panel regressions, housing credit growth is significantly affected by changes in the maximum debt-service-to-income (DSTI) ratio, the maximum loan-to-value ratio, limits on exposure to the housing sector and housing-related taxes. But only the DSTI ratio limit has a significant effect on housing credit growth when we use mean group and panel event study methods. Among the policies considered, a change in housing-related taxes is the only policy tool with a discernible impact on house price appreciation.

JEL classification: G21, G28

Keywords: House prices, housing credit, financial stability, macroprudential policy