The eï¬?ect of self-ï¬ nanced property buyers on local house prices

This paper tests the hypothesis whether self-i¬ nanced property buyers, such as insurance and pension funds, have a larger ei¬?ect on local house prices than bank-i¬ nanced property buyers, such as homeowners. Self-i¬ nanced property buyers of new residential housing are not dependent on mortgage credit and operate independently of the macro-prudential environment. This is not so for bank-i¬ nanced property buyers. We examine the response of Swiss house prices to new housing investments by self- and bank-i¬ nanced property buyers at the municipality level between 2008 and 2015: a period when interest rates were at the zero lower bound and macro-prudential regulation became more restrictive. Despite being a small investor class for new residential housing, self-i¬ nanced property buyers have a disproportionate ei¬?ect on local house prices.