Determinants and Forecasting of House Prices

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This is an empirical study which goal is to determine what causes changes in housing prices. It is done by using data for Stockholm and Sydney to create a model to forecast the change of house prices in the two cities. The findings suggest that the main determinants are nominal interest, household income, and the supply of new dwellings.This is in line with previous studies. It is also investigated whether the use of financial indicators such as the development of the stock market has an impact on the house prices.The findings regarding the implication of the financial indicators are dubious. Lastly, an investigation is made to see whether the so-called “ripple effect” can be applied to an international level. The inclusion of th...