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1 – 1 of 1Wouter Vangeel, Laurens Defau and Lieven De Moor
Since 2005, Belgian housing prices have strongly increased. As the timing coincides with the implementation of a new fiscal package in order to stimulate homeownership, our study…
Abstract
Purpose
Since 2005, Belgian housing prices have strongly increased. As the timing coincides with the implementation of a new fiscal package in order to stimulate homeownership, our study attempts to provide an understanding whether the mortgage interest and capital deduction (MICPD) policy has had the side-effect of increasing housing prices while, at the same time, controlling for key housing price determinants.
Design/methodology/approach
A fixed-effects regression model is used on a panel dataset of the three Belgian regions over the period 1995–2015.
Findings
Estimations are carried out separately for different house types, being useful as our empirical analysis ascertains a significant price-increasing effect for ordinary houses and apartments but a significant price-reducing effect for villas. In addition, we find, among other things, that interest rates' influence has been less substantial than commonly thought.
Originality/value
These results are relevant for all governments willing to stimulate homeownership through fiscal stimuli.
Details