Owner-Occupied Housing, Inflation and Monetary Policy

Robert J. Hill
University of Graz, Austria

Miriam Steurer
University of Graz, Austria

Sofie R. Waltl
Luxembourg Institute of Socio-Economic Research, Luxembourg & Vienna University of Economics and Business, Austria


The ECB and Eurostat have been trying to bring owner-occupied housing (OOH) into the Harmonized Index of Consumer Prices (HICP) for two decades without success. OOH is now back on the agenda as part of the ECB’s new monetary-policy strategy. We argue that a viable way forward is using a simplified version of the user-cost method. This would improve the harmonization of the HICP, help close the credibility gap between measured inflation and allow the ECB to lean against a housing boom without departing from its inflation target.

JEL.: C31; C43; E01; E31; E52; R31

Keywords: Measurement of inflation; Owner-occupied housing; User-cost; Rental equivalence; Hedonic quantile regression; Housing booms and busts; Inflation targeting; Leaning against the wind


Working Paper:  [Graz Economic Papers]

Presentations:  [NBER Conference on International Comparisons of Income, Prices and Production, MIT, Cambridge (MA), May 2016] [OeNB, Vienna, June 2016] [Oxford U, February 2017] [Institute of Fiscal Studies, London, May 2017] [GGDC 25th Anniversary Conference, Groningen, June 2017] [SEM conference at MIT, Cambridge (MA), July 2017][Reserve Bank of Australia, April 2018] [STATEC, Luxembourg, April 2018] [Economics Statistics Centre of Excellence (ESCoE) Conference on Economic Measurement, Bank of England, May 2018] [International Conference on Real Estate Statistics, Eurostat, Luxembourg, February 2019][US National Academy of Sciences, December 2020][ESCoE Economic Measurement Webinar, October 2021]

Media Coverage: Die Presse (AT), Central Banking (UK)D’Lëtzeburger Land (LU)Lëtzebuerger Journal (LU)