Work detail

The effect of monetary stimulus on housing prices and the relationship of housing and rental prices in European countries

Author: Mgr. Maximilian Hönig
Year: 2021 - summer
Leaders: Mgr. Roman Kalabiška
Consultants:
Work type: Masters
MEF
Language: English
Pages: 138
Awards and prizes:
Link:
Abstract: As real estate is an important part of the wealth composition of households, this
the impact of the financial stimulus that was observed throughout 2020 and how it
might have affected housing prices in various European countries. For this the thesis
runs a Vector Error Correction Model with the following independent variables:
population, exchange rate, inflation, short-term interest rate, unemployment rate and
the compensation of employees. The time frame for this regression is restricted to
2000Q1 to 2019Q4 in order to exclude the housing price development throughout 2020
that is already affected by the financial stimulus. These regression results are then used
in combination with the 2020 actuals of all independent variables to approximate the
expected housing price without financial stimulus. This gives an indication of a
potential overpricing in the markets and provides an understanding of how financial
stimulus might be connected to housing prices. Another analysis in this thesis then
provides an understanding of the leader-follower relationship of housing prices and
rental prices and provides an analysis on how this might be connected to the level of
home ownership in a particular market.

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