Has housing regained its allure? Insights from a new survey-based housing Sharpe ratio

Niccolò Battistini, Adam Baumann, Johannes Gareis and Desislava Rusinova

Economic Bulletin Boxes, 2026, vol. 8

Abstract: Data from the ECB Consumer Expectations Survey allow the construction of a housing Sharpe ratio, which relates the return on housing investment to its risk. Over time, the housing Sharpe ratio has mostly been driven by house price growth expectations (in excess of a riskless return), with changes in house price uncertainty playing a more limited role. However, varying perceptions of price uncertainty do drive differences in the housing Sharpe ratio across household groups: lower uncertainty explains higher ratios for male, older, wealthier, employed and more financially literate households as well as renters relative to their counterparts. Households living in urban areas also have higher ratios, driven by higher house price expectations. The housing Sharpe ratio has been steadily recovering from its trough in 2023 and points to a further moderate recovery in housing investment in the euro area. JEL Classification: R21, D84, D14

Keywords: Housing investment; investor sentiment; return; risk; Sharpe ratio (search for similar items in EconPapers)
Date: 2026-01
Note: 1087208
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