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Christian Höynck
- 17 March 2025
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 2, 2025Details
- Abstract
- The ECB Consumer Expectations Survey (CES) provides regular and timely information on household rent expenditure. This information has been used to analyse developments and to construct an indicator for rent growth that is largely free of composition effects from respondents entering or leaving the panel of survey respondents. Combined with the rich micro data from the CES, this new indicator allows for a detailed analysis of rent growth and its drivers. According to this novel CES-based indicator, rent growth in the euro area peaked in the third quarter of 2023. It then declined but has remained above 3% up to the third quarter of 2024. Given the ease with which rent adjustments can be made, rent growth per square metre has been more than proportionally driven by new rental contracts.
- JEL Code
- C43 : Mathematical and Quantitative Methods→Econometric and Statistical Methods: Special Topics→Index Numbers and Aggregation
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E51 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Money Supply, Credit, Money Multipliers
- 17 March 2025
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 2, 2025Details
- Abstract
- This article reviews developments in the euro area housing market during the recent house price cycle and compares them with previous cycles. The recent downturn in house prices was relatively mild and short-lived, as well as less pervasive, compared with the global financial crisis and the sovereign debt crisis and implied smaller adjustments to overvaluations. This limited decline in house prices effectively unwound the exceptional pandemic-related surge in housing demand and, therefore, did not bear the same hallmarks as an outright recession. This is because income remained solid owing to the favourable labour market conditions and excess savings had also accumulated during the pandemic. The role of tighter financing conditions in the adjustment of house prices was mitigated by relatively sound balance sheet positions, reflecting the macroprudential measures undertaken in the aftermath of the global financial crisis, a stronger prevalence of fixed rate mortgages and links between the housing and the rental market. With the combination of prevailing supply-side shortages and continuing sound demand fundamentals, house price developments may well continue on their upward path but still remain uncertain.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
R31 : Urban, Rural, Regional, Real Estate, and Transportation Economics→Real Estate Markets, Spatial Production Analysis, and Firm Location→Housing Supply and Markets
- 24 April 2024
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 3, 2024Details
- Abstract
- The pricing decisions of firms are a key determinant of inflation. To understand inflation dynamics, it is necessary to analyse how often and by how much individual prices change. This article discusses what micro price data gathered by the European System of Central Banks’ Price-setting Microdata Analysis Network (PRISMA) tell us about the way firms set their prices. The results point to state dependence in pricing, whereby firms change prices more frequently following large shocks. This also affects the transmission of monetary policy. Evidence from recent microdata as at the end of 2023 suggests that, after an increase in the frequency of price changes following the unusually large shocks experienced since 2020, price changes in the euro area are starting to behave in a more similar way to the pre-pandemic period.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy