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Monetary policy and house price heterogeneity: Evidence from the U.K

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  • Margaris, Aristotelis

Abstract

This paper investigates the effects of monetary policy shocks on regional house prices in the U.K. The empirical results indicate significant heterogeneity in the impact of monetary policy on regional house prices. Focusing on the source of heterogeneity, the paper suggests a demand-side factor to be a major driver. The regions with relatively affordable housing exhibit higher sensitivity to monetary policy than those with less affordable housing. The prevailing view that region-specific housing supply constraints and regional housing supply elasticity are responsible for the heterogeneous response of regional house prices to monetary policy shocks is not confirmed by the empirical findings.

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  • Margaris, Aristotelis, 2024. "Monetary policy and house price heterogeneity: Evidence from the U.K," Economics Letters, Elsevier, vol. 244(C).
    • Handle: RePEc:eee:ecolet:v:244:y:2024:i:c:s016517652400507x
    DOI: 10.1016/j.econlet.2024.112023
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    More about this item

    Keywords

    Monetary policy; Regional house prices; Housing supply; Housing demand; FAVAR;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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