Housing market volatility and structural factors across selected Western economies

This study investigates how structural features of housing systems – mortgage leverage, tenure composition, and rental market depth – affect volatility and persistence in housing price indicators across six European countries (1975Q1–2024Q4). Using quarterly data on real house prices (RHPI), price-to-rent (PTR), and price-to-income (PTI) ratios, I combine visual diagnostics with formal statistical tests to assess the role of institutional factors. My results show that valuation indicators perform differently across housing regimes. PTI proves more reliable in tenant-oriented systems such as Austria and Germany, and also in France despite its sizable share of leveraged owners, whereas PTR is better suited to market-driven, ownership-heavy contexts like Ireland, Spain, and the UK. Overall, I show that housing market volatility is not merely cyclical but structurally embedded. Policy frameworks for valuation diagnostics and credit risk assessment should account for institutional diversity rather than rely on uniform thresholds.

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