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Monetary Policies and Carry Trade on the Real Estate Market in the UK: A Reappraisal

Author

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  • Alain Coen
  • Philippe Guardiola

Abstract

The aim of this article is to analyze the impact of the monetary policies of the UK, US and EU on the UK’s real estate market, during the last two decades, since 2000. Using unsmoothed returns, we examine the effect of variations of money supply and government bond yields on office, retail and industrial total returns, using REITs as an investment channel. More precisely, with a dynamic VAR modeling, we shed new light on the comovements of REITs prices, stock prices and real estate prices. Our results report that UK money supply growth and interest rate decrease have a strong positive impact on office and retail prices across the country, while limited for industrial. The ECB’s decisions have the opposite effect as they seem to create a capital flight toward the EU.

Suggested Citation

  • Alain Coen & Philippe Guardiola, 2024. "Monetary Policies and Carry Trade on the Real Estate Market in the UK: A Reappraisal," ERES eres2024-111, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2024-111
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    More about this item

    Keywords

    Carry trade; Monetary policies; Real estate prices; REIT;
    All these keywords.

    JEL classification:

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

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