Housing costs: a final hurdle in the last mile of disinflation?
Key takeaways
- Inflation receded from recent peaks, but housing cost growth remains elevated. This strength reflects pandemic-induced changes in housing supply and demand which further aggravated existing pressures from long-standing housing shortages and demographic trends.
- Strong growth of the housing component of inflation can be a concern for monetary policy because it tends to be more persistent than components related to other services and goods, reflecting lags in measurement and infrequent changes in rents.
- In the short term, rents and housing costs may rise after a monetary policy tightening if landlords pass higher financing costs to tenants, property developers reduce new supply or more households opt to rent rather than buy.
00:10:57
Podcast
30 Sep 2024
Housing costs
Deniz Igan explains the drivers and implications of the strong growth of housing costs despite a decline in inflation.
Read the BIS Bulletin for more: Housing costs: a final hurdle in the last mile of disinflation?
The views expressed in this publication are those of the authors and do not necessarily reflect the views of the BIS or its member central banks.
