A Housing Portfolio Channel of QE Transmission

64 Pages Posted: 19 Mar 2021 Last revised: 30 May 2023

See all articles by Dominik Boddin

Dominik Boddin

Deutsche Bundesbank - Deutsche Bundesbank Research Data and Service Centre

Daniel te Kaat

University of Groningen

Chang Ma

Fudan University - Fanhai International School of Finance (FISF)

Alessandro Rebucci

Johns Hopkins University - Carey Business School; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Date Written: February 9, 2021

Abstract

We document a housing portfolio channel of quantitative easing (QE) transmission exploiting household variation in German data in a difference-in-differences setting around the time of QE adoption in the euro area in 2015. We find that QE encourages households with larger initial bond holdings to rebalance their portfolios more toward second homes. The rebalancing is especially pronounced among higher-income and church-affiliated households that have a stronger motive to purchase and rent out properties due to tax incentives. We also find that more informed households, with prior knowledge of the rental market or receiving financial advice from banks, and more financially literate are more likely to rebalance toward second homes. Finally, we also show that, in regions more exposed to this channel, house prices increase more than rents, and sale listings decrease more than rental ones, suggesting that the rental supply may increase in response to QE.

Keywords: Buy-to-let, Germany, Housing Returns, Housing Tax Regimes, House- hold Portfolio Rebalancing, Monetary Policy, Rental Yields, Quantitative Easing

JEL Classification: E3, E4, E5, G5, R3

Suggested Citation

Boddin, Dominik and te Kaat, Daniel and Ma, Chang and Rebucci, Alessandro, A Housing Portfolio Channel of QE Transmission (February 9, 2021). Available at SSRN: https://ssrn.com/abstract=3782131 or http://dx.doi.org/10.2139/ssrn.3782131

Dominik Boddin

Deutsche Bundesbank - Deutsche Bundesbank Research Data and Service Centre ( email )

Wilhelm-Epstein-Straße 14
Frankfurt am Main, 60431
Germany

Daniel Te Kaat

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

Chang Ma (Contact Author)

Fudan University - Fanhai International School of Finance (FISF) ( email )

China

Alessandro Rebucci

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

HOME PAGE: http://carey.jhu.edu/faculty-research/faculty-directory/alessandro-rebucci-phd

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

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