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CNB > Economic research > Research publications > CNB Working paper series > 2017 > House Prices and Household Consumption: The Case of the Czech Republic

House Prices and Household Consumption: The Case of the Czech Republic

Jan Brůha, Michal Hlaváček, Luboš Komárek

In this paper, we investigate whether movements in property prices have detectable effects on Czech households’ consumption and saving decisions. We concentrate on three episodes of movements in house and apartment prices and ask whether property owners have significantly different consumption and saving choices from households living in rented properties. We found that, on average, property owners tend to have a lower propensity to consume and a higher saving rate independently of whether property prices move up or down. This casts doubts on the strength of the collateral channel linking the housing market to the macroeconomy in the Czech Republic.

JEL codes: D12, D14, E21, R31

Keywords: Consumption and saving decisions, property prices

Issued: December 2017

Download: CNB WP No. 11/2017 (pdf, 775 kB)