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Why has housing lost its lure? Evidence from the ECB’s Consumer Expectations Survey

Author

Listed:
  • Battistini, Niccolò
  • Charalambakis, Evangelos
  • Gareis, Johannes
  • Rusinova, Desislava

Abstract

This box analyses the factors determining household perceptions of the attractiveness of housing as an investment. It finds that these perceptions differ depending on the demographic and economic characteristics of households. Using a linear probability regression model, the box also shows that higher perceptions of housing as a good investment are associated with higher expectations for economic growth, personal income growth and house price growth, as well as lower expectations for inflation and mortgage rates. Combining the model estimates with the average expectations of households surveyed in the CES at each point in time, the box derives an expectations-based indicator of households’ perceptions of housing as a good investment. This indicator has declined significantly since June 2021, mainly driven by expectations of higher mortgage interest rates, reflecting the impact of tighter monetary policy and financial conditions in general. JEL Classification: R2, R3

Suggested Citation

  • Battistini, Niccolò & Charalambakis, Evangelos & Gareis, Johannes & Rusinova, Desislava, 2023. "Why has housing lost its lure? Evidence from the ECB’s Consumer Expectations Survey," Economic Bulletin Boxes, European Central Bank, vol. 5.
    • Handle: RePEc:ecb:ecbbox:2023:0005:1
    Note: 1087208
    as

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    File URL: https://www.ecb.europa.eu//press/economic-bulletin/focus/2023/html/ecb.ebbox202305_01~755244b08d.en.html
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    More about this item

    Keywords

    Housing; monetary policy;

    JEL classification:

    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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