Housing boom: what are the consequences for monetary policy?

Despite the Covid economic shock, house prices have continued to rise in most advanced economies, and are also increasing rapidly in some emerging economies. This is not (yet) a global housing boom. Indeed, indicators of overvaluation remain below those observed before the Great Financial Crisis (GFC) and are still very contrasted across regions. 

However, the simultaneity of price increases in very different countries raises the question of a possible “common factor”. All eyes are naturally on the expansion of central banks’ balance sheets. Here, we ask what role house prices can play in determining monetary policy in general, as well as in advanced economies (mostly the US and Europe) in the current situation.

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