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Monetary policy influences in Australian housing markets

Author

Listed:
  • Gregory Costello
  • Patricia Fraser
  • Garry MacDonald

Abstract

Purpose - – This paper aims to analyze the impact of common monetary policy shocks on house prices at national and capital city levels of aggregation, using Australian data and the Lastrapes (2005) two-part structural vector autoregressive (SVAR) empirical method. Design/methodology/approach - – The Lastrapes (2005) two-part SVAR empirical method is applied to Australian housing market and macroeconomic data to assess the impact of common monetary policy shocks on house prices. Findings - – Results show that while the impact of shocks to interest rates on aggregate house prices is almost neutral, the responses of state capital city house prices to the same shock can exhibit significant asymmetries. Originality/value - – This paper contributes to the monetary policy–asset price debate by examining the influence of Australian monetary policy on capital city housing markets over the period 1982-2012. To the authors’ knowledge, this is the first empirical study that has adapted this Lastrapes (2005) methodology to the analysis of housing markets.

Suggested Citation

  • Gregory Costello & Patricia Fraser & Garry MacDonald, 2015. "Monetary policy influences in Australian housing markets," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 8(2), pages 265-286, June.
    • Handle: RePEc:eme:ijhmap:v:8:y:2015:i:2:p:265-286
    DOI: 10.1108/IJHMA-08-2014-0032
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    Citations

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    Cited by:

    1. Kolisi, Nwabisa & Phiri, Andrew, 2017. "Changes in the relationship between interest rates and housing prices in South Africa around the 2007 financial crisis," MPRA Paper 80173, University Library of Munich, Germany.
    2. Muhammad Mohsin & Mohammad Nurunnabi & Jijian Zhang & Huaping Sun & Nadeem Iqbal & Robina Iram & Qaiser Abbas, 2021. "The evaluation of efficiency and value addition of IFRS endorsement towards earnings timeliness disclosure," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 1793-1807, April.
    3. IKM Mokhtarul Wadud & Omar H. M. N. Bashar & Huson Joher Ali Ahmed & William Dimovski, 2022. "Property price dynamics and asymmetric effects of economic policy uncertainty: New evidence from the Australian capital cities," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4359-4380, December.
    4. James Graham & Alistair Read, 2023. "House Prices, Monetary Policy and Commodities: Evidence from Australia," The Economic Record, The Economic Society of Australia, vol. 99(324), pages 1-31, March.
    5. Valadkhani, Abbas & Costello, Greg & Ratti, Ronald, 2016. "House price cycles in Australia’s four largest capital cities," Economic Analysis and Policy, Elsevier, vol. 52(C), pages 11-22.

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