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House price affordability, the global financial crisis and the (ir)relevance of mortgage rates

Graham Squires, Don Webber Orcid Logo

Regional Studies, Regional Science, Volume: 6, Issue: 1, Pages: 405 - 420

Swansea University Author: Don Webber Orcid Logo

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DOI (Published version): 10.1080/21681376.2019.1643777

Abstract

Although house prices and wages are both influenced by distinct factors that shape their own evolutions, they are also intrinsically connected through house price affordability. Standard theory suggests that macroeconomic policies centred around adjustments in the mortgage rate are of prime importan...

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Published in: Regional Studies, Regional Science
ISSN: 2168-1376
Published: Taylor and Francis 2019
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa51314
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Abstract: Although house prices and wages are both influenced by distinct factors that shape their own evolutions, they are also intrinsically connected through house price affordability. Standard theory suggests that macroeconomic policies centred around adjustments in the mortgage rate are of prime importance in ensuring that the housing market does not overheat. This study contributes to the understanding of the link between housing market affordability and mortgage rates by investigating this association across regions of New Zealand using quarterly data between 2000-2017. Applications of trajectory regression reveal that the global financial crisis affected regional house price affordability asymmetrically and there was no statistically significant correlation between house price affordability and mortgage rates.
Keywords: Affordability; House Prices; Mortgage Interest; Wages; Affordability Growth; Regional Affordability; Affordability Trajectories
Issue: 1
Start Page: 405
End Page: 420

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