Hana Hejlová, Michal Hlaváček
This article describes the house price equilibrium assessment process used by the CNB in its decision-making on macroprudential measures intended to mitigate risks associated with loan financing of residential property purchases. It first explains why it is necessary to use multiple models simultaneously to correctly assess house price sustainability. It goes on to describe the approaches the CNB currently applies to estimate house price misalignment and discusses their results. It then presents a method for aggregating the estimates produced by those approaches and provides an aggregate assessment of the results. This method indicates that Czech house prices were roughly at their equilibrium level in mid-2014 following an extended period of slight undervaluation since the third quarter of 2009.
Issued: June 2015
Download: Thematic article in the Financial Stability Report 2014/2015 (pdf, 137 kB)