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

Aristotelis Margaris

Economics Letters, 2024, vol. 244, issue C

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.

Keywords: Monetary policy; Regional house prices; Housing supply; Housing demand; FAVAR (search for similar items in EconPapers)
JEL-codes: E52 R21 R31 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:244:y:2024:i:c:s016517652400507x

DOI: 10.1016/j.econlet.2024.112023

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