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Owner-occupied housing and inflation measurement

Author

Listed:
  • Eiglsperger, Martin
  • Arioli, Rodolfo
  • Goldhammer, Bernhard
  • Gonçalves, Eduardo
  • Kouvavas, Omiros

Abstract

The ECB’s monetary policy strategy review confirmed that the Harmonised Index of Consumer Prices (HICP) remains the appropriate price measure for assessing the achievement of the medium-term price stability objective. However, the Governing Council recognised that the inclusion of costs related to owner-occupied housing in the HICP would better represent the inflation rate that is relevant for households. This article elaborates on the topic of owner-occupied housing and its proposed inclusion in the HICP. It showcases the two options considered by the Governing Council, focusing on their statistical and conceptual properties. For the net acquisition approach recommended by the Governing Council, the article presents analytical indices based on ECB approximations that serve as a blueprint for the quarterly internal measure to be monitored. Finally, the article looks ahead to the incorporation of the costs of owner-occupied housing into the HICP and the associated challenges, noting that the current HICP will remain the main reference index for monetary policy during the transition period. JEL Classification: C43, E31, E51

Suggested Citation

  • Eiglsperger, Martin & Arioli, Rodolfo & Goldhammer, Bernhard & Gonçalves, Eduardo & Kouvavas, Omiros, 2022. "Owner-occupied housing and inflation measurement," Economic Bulletin Articles, European Central Bank, vol. 1.
    • Handle: RePEc:ecb:ecbart:2022:0001:1
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    Citations

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    Cited by:

    1. Egan, Paul & McQuinn, Kieran, 2023. "Monetary tightening in the Euro Area: Implications for residential investment," Papers WP767, Economic and Social Research Institute (ESRI).
    2. Joris Wauters & Zivile Zekaite & Garo Garabedian, 2024. "Owner-occupied housing costs, policy communication, and inflation expectations," Working Paper Research 449, National Bank of Belgium.
    3. Ronan C Lyons & Allison Shertzer & Rowena Gray & David Agorastos, 2026. "The Price of Housing in the United States, 1890–2006," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 141(1), pages 559-603.
    4. Lucian Briciu & Stefan Hohberger & Luca Onorante & Beatrice Pataracchia & Marco Ratto & Lukas Vogel, 2023. "The ECB Strategy Review - Implications for the Space of Monetary Policy," European Economy - Discussion Papers 193, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    5. Pongpitch Amatyakul & Deniz Igan & Marco Jacopo Lombardi, 2024. "Sectoral price dynamics in the last mile of post-Covid-19 disinflation," BIS Quarterly Review, Bank for International Settlements, March.
    6. Nickel, Christiane & Kilponen, Juha & Moral-Benito, Enrique & Koester, Gerrit & Ciccarelli, Matteo & Enders, Almira & Holton, Sarah & Landau, Bettina & Venditti, Fabrizio & Bobeica, Elena & Brand, Cla, 2025. "A strategic view on the economic and inflation environment in the euro area," Occasional Paper Series 371, European Central Bank.

    More about this item

    Keywords

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    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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