BBS - Mr. Ivan Žilić, Ph.D.

We invite you to the 31st and also the 6th online Brown Bag Seminar which will be held on Thursday, Nov. 12, 2020, starting at 2 pm via the Google Meet application. The cycle of the Brown Bag Seminars will be continued by Mr. Ivan Žilić, Ph.D. (Institute of Economics, Zagreb), who will present the paper "Home Sweet Home: The Impact of Housing Loan Subsidies on the Real Estate Market in Croatia", co-authored with Mr. Davor Kunovac (CNB).
To access the Brown Bag Seminar, you have to click at https://meet.google.com/ on "Join or start a meeting" and enter "brownbagseminar" in the space provided.
 

This paper is investigating whether housing loan subsidies, introduced in Croatia, have contributed to the increase in real estate prices in Croatia. The subsidy is implemented by covering part of the annuity in the initial repayment period of the housing loan, with the specific feature that the household can apply for the subsidy only for a short period. Using data on all housing transactions from 2015 to the end of 2019, we document that the introduction of the subsidy disrupted the usual monthly dynamics of housing transactions, which became very concentrated in the month when subsidy applications were submitted. Applying the event study method, we find that apartment prices increased in the period around the introduction of the subsidy. In order to confirm the conclusions of our basic specifications, we are working through auxiliary analyzes. We use the rules of subsidizing housing loans to get an additional control group, discuss the role of the international real estate price cycle, and explore the connection between the real estate market and tourism in Croatia. We conclude that subsidizing housing loans acted as a pro-cyclical measure that contributed to the already growing trend of rising apartment prices in Croatia. Finally, using regional variations in the intensity of the subsidy introduced in 2018, we conclude that the increase in real estate prices took place in areas and regions with an already active real estate market.

Mr. Ivan Žilić, Ph.D., is a research associate at the Institute of Economics, Zagreb, and an external associate at the LSE Center for Southeast Europe. He graduated from the Faculty of Economics & Business in Zagreb, received his master's degree from Carlos III University in Madrid, and his doctorate from Johannes Kepler University in Linz. He researches the economics of work, education, and health, all from a microeconometric perspective.

Description of the Brown Bag Seminar concept:
The Brown Bag Seminar (BBS) is an informal one-hour workshop with aim of presenting research in different stages of design (ideas, rounded theoretical framework, conducted empirical research, etc.), promoting discussion and creating a stimulating environment focused on the constructive discussion between exhibitors and the rest of participants of the seminar. The basic idea of the BBS is to create a platform where at least once a month, the FEB ZG employees will have the opportunity to present the ideas and articles they work on within their scientific-research work. We invite you to respond and help with your constructive comments to exhibitors and expose by yourself the topics you are currently working on, unpublished works or present the research ideas you are thinking about.