April 3, 2017

The Impact of House Price Shocks on the Savings of Dutch Homeowners and Renters

We study the impact of changes in house prices on savings using administrative panel data on Dutch owner-occupying and renting households over the period 2006-2013. We analyze the immediate response as well as the response aggregated over several years.

We find a marginal propensity to save (MPS) out of housing wealth in the short-run between 0 and -0.05, while the long-run effect ranges from -0.02 to -0.13. Younger homeowners consistently respond more strongly both in the short and the long-run, while pre-crisis leverage has a non-homogeneous effect in the short-run and no effect in the long-run. We only find a small, significant, and positive shortrun effect for old renters and no effect for all other groups of renters, suggesting that our results are not driven by common causality.


Michiel Bijlsma
Remco Mocking