Seminar: 'The effect of house prices on savings of Dutch households'

Time: 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague

Presentation: Remco Mocking (CPB)

Discussant: Mauro Mastrogiacomo (VU)

Language: English

Registration:  Please register by sending an email to seminars@cpb.nl.

Abstract subject
We study the link between house prices and savings behavior of Dutch homeowners by exploiting regional variation in the large drop in house prices after 2008. Using unique administrative data, we build a balanced panel of about 2 million households over the period 2006-2011, containing house value, wealth, income and other household characteristics. We find a negative relationship between house price changes and savings, with the largest effects for young households with negative housing equity. Moreover, we find larger effects for house price increases compared to house price decreases. Households of age 30 with loan-to-value ratios above one save roughly 2 euro less for a 100 euro increase in house prices, while they save around 1 euro more for a 100 euro decrease. Our results are robust to including mortgage payoffs in our savings definition.

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