Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322037 
Year of Publication: 
2025
Series/Report no.: 
ECB Working Paper No. 3026
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Institutional investors, such as investment funds, are playing an increasingly important role in residential real estate markets. This raises the possibility that their actions might drive aggregate market outcomes and may change how and which macrofinancial shocks transmit to house prices. In a Bayesian vector autoregression setting, we show that a demand shock from institutional investors has a positive and persistent effect on aggregate euro area house price growth and mortgage lending volumes. Institutional investors also increase their purchase activity following a loosening of monetary policy. Exploiting regional heterogeneity in eight euro area countries, we show in a panel regression setting that institutional investors weaken the link between house price growth and local economic fundamentals, but strengthen the sensitivity to monetary policy and financial market developments.
Subjects: 
Real estate
financial stability
non-bank financial intermediation
investment funds
monetary policy
JEL: 
R31
E52
G23
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-7111-9
Document Type: 
Working Paper

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