Working Paper: A Leading Indicator of House-Price Bubbles

Working Papers - April 2017 - No. 114

Authors Hviid, Simon Juul
Subject Financial stability; Financial risks; Models; Other economic analyses; Housing Market, Home Financing
Type Working paper
Year 2017
Published 6 April 2017
Abstract icon The emergence of a house-price bubble can have sizeable implications for macroeconomic as well as financial stability. This paper investigates the dynamics of house prices in Denmark in order to identify emerging bubbles in due time. The empirical results identify developments in line with a price bubble from mid-2005 in Denmark. When applied to flats in Copenhagen, real price developments in 2015-16 indicate speculative behaviour but it cannot be ruled out that developments are driven by fundamental economic factors.