House Price Dynamics : Analysis of the Oslo Market

Abstract

In this paper we empirically examine the house price dynamics in the Oslo market. Housing prices in Oslo have been a searing topic in the last couple of years, thus, we believe this will be an important contribution to the literature. First, we will examine how the price to rent ratio together with the extrapolative expectations explain the housing prices in Oslo today. In addition, we want to look at all the macro-economic factors and test how well they explain the housing prices. From the Granziera & Kozicki (2012) approach we simulate the price to rent ratio with very good results. This is further backed up by applying the Vector Error Correction framework which finds that in both the long and the short-run we find explanatory effects of extrapolative expectations towards the price to rent ratio. These explanatory effects are also found in other certain macro-economic variables.