Are Swedish housing markets duration dependent?

Abstract

Sweden’s rapidly growing housing sector, and the long-last boom it’s experienced even in a global financial crisis, has been the topic for several recent studies. In this thesis, we examine house price data from 279 Swedish municipalities during the years 1981-2016 to test for duration dependence. We include municipality-specific growth in real income and population, and a national level real mortgage rate. To test for duration dependence, we use a linear probability model as our benchmark regression, and expand on this using a logit specification. The estimations on the contraction phases are inconsistent, and we can therefore not conclude that contraction phases exhibit duration dependence. The estimations on expansion phases indicate that duration dependence is present.