KEO Discussion Paper No.51

Current Wealth, Housing Purchase and Private Housing Loan Demand in Japan


Japanese households accumulate a large amount of wealth for a downpayment; thus current wealth plays an important role in a home acquisition.Public loans through direct mortgage lending also provide strong support for a home purchaser.We estimated the wealth effect on private mortgage debt and housing consumption (house value) by applyng a model which posits that a mortgage debt demand is derived from house purchase decision in conjunction with housing consumption. We useed a simultaneous equation Tobit estimation method. Wealth effects on private mortgage debt, the likelihood of borrowing, and on house value are not elastic; house value effect on mortgage borrowing, however, is elastic.
KEO Discussion Paper