Heterogeneity in households' expectations of housing prices – evidence from micro data.

• Young Swedish people tend to expect higher housing-price increases than old people. • Age effect is seen in recent Swedish survey data but not in corresponding US data. • Results are consistent with personal experiences affecting expectations. Expectations about future housing prices are arguably an important determinant of actual housing prices, and an important input in decisions on whether and how to transact in the housing market. Using micro-level survey data on Swedish households, we analyse households' expectations of housing prices and how these expectations relate to the characteristics of the respondents. Results show that age is found to be significantly related to housing-price expectations, with the youngest households – whose adulthood largely corresponds to the extended period of rapid housing-price growth in Sweden – having the highest housing-price expectations. This is consistent with the hypothesis that expectations are influenced by personal experiences. Our findings suggest that aggregate measures of expectations might hide important features of the data, which could be of interest to policy makers when choosing regulatory actions or formulating macroprudential policies. [ABSTRACT FROM AUTHOR]