This research examines the dynamics and associated risks of real house price growth in the context of macroprudential policymaking for the case of Croatia. The research, a first of its kind in the Croatian housing market, aims to identify the main factors influencing house price-at-risk (HaR) and predict the downside risks of future real house price growth. Results suggest that, even though the downside risks in the housing market have increased in recent years, they are less pronounced compared to the period before the global financial crisis. Results also show the challenging feature of the empirical approach used for assessing forecasted real house price growth and understanding key drivers of house price dynamics. Thus, this research should be seen as a starting point for enhancing the methodology that will enable informed decision-making based on expert judgment and provide assistance in communicating risks related to housing markets.
For more information on the results for regions refer to the paper.
Most of the related HaR literature aligns with GaR approach proposed by Adrian et al. (2019), Aikman et al. (2019) and others. Some central banks, like the Central Bank of Ireland (O’Brien and Wosser (2018), O’Brien et al. 2022)) and the ECB (Lang et al. 2020) regularly use HaR approach in their macroprudential policy analyses. Both the ECB and IMF (2019) regularly report HaR for euro-area countries and emerging economies respectively as part of their financial stability reports/reviews.
2002 Q1 is the earliest date for which the data on house prices is available.