Discussion paper

DP14632 The effect of self-financed property buyers on local house prices

This paper tests the hypothesis whether self-financed property buyers, such as insurance and pension funds, have a larger effect on local house prices than bank-financed property buyers, such as homeowners. Self-financed 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-financed property buyers. We examine the response of Swiss house prices to new housing investments by self- and bank-financed 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-financed property buyers have a disproportionate effect on local house prices.


Fischer, A and L Zachmann (2020), ‘DP14632 The effect of self-financed property buyers on local house prices‘, CEPR Discussion Paper No. 14632. CEPR Press, Paris & London. https://cepr.org/publications/dp14632