House Price Shocks, Negative Equity and Household Consumption in the UK in the 1990s

Andrew Gordon Henley; Richard Disney; David Jevons

House Price Shocks, Negative Equity and Household Consumption in the UK in the 1990s

Andrew Gordon Henley, Richard Disney, David Jevons

Aberystwyth Business School

University of Nottingham

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Abstract

We examine the impact of housing capital gains on savings behaviour during the 1990s British housing market cycle using microdata from the British Household Panel Survey and county-level house price data. We condition the models on household real financial capital gains using Family Resources Survey data. We find a marginal propensity to consume out of housing wealth of between 0.01 and 0.03, depending on specification. Among our novel findings are asymmetric behaviour between periods of house price rises and falls, with stronger consumption response during periods of house price increases, and a disproportionate impact on saving if the household has negative housing equity.

Original language	English
Publication status	Published - Mar 2002
Event	Royal Economic Society Annual Conference 2002 - Warwick, United Kingdom of Great Britain and Northern Ireland Duration: 25 Mar 2002 → 27 Mar 2002

Conference

Conference	Royal Economic Society Annual Conference 2002
Country/Territory	United Kingdom of Great Britain and Northern Ireland
City	Warwick
Period	25 Mar 2002 → 27 Mar 2002

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RES02_house prices and consumptionSubmitted manuscript, 214 KB
House Price Shocks, Negative Equity and Household Consumption in the UK in the 1990sSubmitted manuscript, 194 KB

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title = "House Price Shocks, Negative Equity and Household Consumption in the UK in the 1990s",

abstract = "We examine the impact of housing capital gains on savings behaviour during the 1990s British housing market cycle using microdata from the British Household Panel Survey and county-level house price data. We condition the models on household real financial capital gains using Family Resources Survey data. We find a marginal propensity to consume out of housing wealth of between 0.01 and 0.03, depending on specification. Among our novel findings are asymmetric behaviour between periods of house price rises and falls, with stronger consumption response during periods of house price increases, and a disproportionate impact on saving if the household has negative housing equity.",

author = "Henley, {Andrew Gordon} and Richard Disney and David Jevons",

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T1 - House Price Shocks, Negative Equity and Household Consumption in the UK in the 1990s

AU - Henley, Andrew Gordon

AU - Disney, Richard

AU - Jevons, David

N1 - Royal Economic Society Annual Conference 2002

PY - 2002/3

Y1 - 2002/3

N2 - We examine the impact of housing capital gains on savings behaviour during the 1990s British housing market cycle using microdata from the British Household Panel Survey and county-level house price data. We condition the models on household real financial capital gains using Family Resources Survey data. We find a marginal propensity to consume out of housing wealth of between 0.01 and 0.03, depending on specification. Among our novel findings are asymmetric behaviour between periods of house price rises and falls, with stronger consumption response during periods of house price increases, and a disproportionate impact on saving if the household has negative housing equity.

AB - We examine the impact of housing capital gains on savings behaviour during the 1990s British housing market cycle using microdata from the British Household Panel Survey and county-level house price data. We condition the models on household real financial capital gains using Family Resources Survey data. We find a marginal propensity to consume out of housing wealth of between 0.01 and 0.03, depending on specification. Among our novel findings are asymmetric behaviour between periods of house price rises and falls, with stronger consumption response during periods of house price increases, and a disproportionate impact on saving if the household has negative housing equity.

UR - http://hdl.handle.net/2160/12287

M3 - Paper

T2 - Royal Economic Society Annual Conference 2002

Y2 - 25 March 2002 through 27 March 2002

ER -

House Price Shocks, Negative Equity and Household Consumption in the UK in the 1990s

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