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