Does Housing Really Lead the Business Cycle in Spain?

Abstract

The aim of this paper is to characterize the cyclical properties of Spanish real and nominal housing related variables. Our three main results are: first, housing appears to lead the business cycle. Second, fluctuations in home prices are positively related to those of residential investment, suggesting the dominant role of demand factors over supply ones. Third, there are interesting asymmetries in cyclical fluctuations: contractions in GDP appear to be briefer than expansions.