Does monetary policy uncertainty affect housing prices?

Abstract

This paper empirically examines the impact of different regimes of monetary policy uncertainty(MPU) index on housing sales and jeonse price volatility covering the period from January 1990 to December 2021 with adopting Markov regime switching. The anaysis result can be summarized as following. First, During the sample analysis period, it is found that the higher the MPU index, the more negatively the housing sales price at the high volatility regime 2(expansion period). Second, it is found that the higher the MPU index, regardless of regimes, is to affect a negative effect on the housing sales price during the post-global financial crisis period. Third, It ia found that the MPU index reacted asymmetrically to housing prices or jeonse prices. Therefore, in order to stabilize the economy, it is necessary to simultaneously consider not only traditional real economy stabilization policies such as interest rate policies but also market psychological factors such as the MPU index as policy goal management indicators.