Explaining house price changes in Greece

Dimitrios Gounopoulos, Andreas Merikas, Anna Merika, Anna Triantafyllou

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This paper develops an equilibrium model for the Greek housing market that incorporates both macroeconomic as well as country-specific variables that affect demand for and supply of houses. In the overall upward phase of the 26-year period examined (1985Q1-2010Q4), our investigation of short-term fluctuations in real house prices and stock prices confirms the inverse relationship between movements in the housing price index and the stock exchange general index, identifies the direction of causality as running from the financial sector to the real sector, and finds that, following an exogenous shock, reversion to the long-run equilibrium is a rather slow process. Furthermore, we identify a fundamental shift in the behaviour of Greek homeowners, who appear to be moving away from the treatment of housing as consumption good, towards treating house purchases as investment.
Original languageEnglish
Pages (from-to)549 - 561
Number of pages12
JournalApplied Financial Economics
Issue number7
Early online date2 Dec 2011
Publication statusPublished - 1 Apr 2012


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