Correlation Between Credit and Real Estate Prices: Regional Evidence in the City of Salvador

Abstract

The study investigates the correlation between the supply of credit and the price of housing in Salvador, with an emphasis on regional differences. The objective is to understand how the availability of real estate credit influences the dynamics of prices in different locations. The research uses data on credit at the national level and housing prices at the local scale. The Vector Error Correction Model (VECM) allows us to examine the interactions between these variables over time. The results indicate that the supply of credit has an unequal impact on housing prices in different regions of Salvador. The availability of credit drives the appreciation of properties located in noble areas, while it has negative effects in popular regions. Thus, the availability of credit exerts an asymmetric influence on the real estate market in the city of Salvador.