The link between monetary policy and the direct European office market: some empirical evidence
||Coen, Alain; Benoit Lefebvre, Arnaud Simon
||The link between monetary policy and the direct European office market: some empirical evidence
||24th Annual European Real Estate Society Conference in Delft, Netherlands
||Since the financial crisis Central Banks have used unconventional monetary policy and increased the quantity of money available in the economy. The purpose of this paper is to study the effect of money supply on commercial real estate prices. The paper uses a panel estimation to determine the relationship between office price indexes and explanatory variables, both at different locations and at different periods. The panel analysis allows understanding price movements across the 15 main office markets in continental Europe between 2005 and 2015. To pick-up the relation between prices and money supply, we have constructed, for each market a monetary index adapted to commercial real estate. Results show that office prices are driven by economic variables, but there is also a positive relationship between the monetary index and the office prices. Restricting the analysis between 2010 and 2015 we found a reinforced causal relation between prices and money. Quantitative easing has an important impact on real estate.
||European real estate market; Office prices; Monetary supply; Panel Estimation
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||Real Estate Markets & Economics
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