Owner-Occupied Housing Costs and Monetary Policy: Goals and Challenges for the Euro Area: In-Depth Analysis

Abstract

Owner-occupied housing costs represent an important expenditure for households and should be included in the Harmonised Index of Consumer Prices. Conceptual and practical challenges must be resolved before this can be implemented. Estimates suggest that these costs would have a small impact on monetary policy. At the same time, different degrees of home ownership in the euro area mean that their inclusion may affect countries differently. Significant complementarity with other EU policies, like financial stability, are unlikely to materialise. This paper was provided by the Policy Department for Economic, Scientific and Quality of Life Policies at the request of the committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 15 November 2021.