The impact of mortgage regulations on housing prices : a case study of Norway

Abstract

The Ministry of Finance over the years have instituted guideline and policies in an attempt to dampen increasing housing prices and household debt. This research studies how housing prices and household debt has been affected after the 2017 mortgage regulations. Using data from Eiendomsverdi, Statistics Norway and Norges Bank, this study finds that, there has been slower increase in household debt and housing prices after the mortgage regulations in 2017. By using the hedonic model, this study finds that the coefficient of housing characteristics like living area, geographical location and the estate type has changed over this period, but the change has been slower than the change in the coefficients before the 2017 mortgage policy. Also, in using the VECM, this study finds a negative relationship between house prices and household debt.