This article examines the inflation hedging capacity of the private home. We employ unique long-term data for inflation, house price dynamics and rents for Amsterdam dating back to 1814, allowing us to study total housing returns in different inflation regimes and for varying investment horizons. Our Amsterdam data show that homeownership's protection against actual and expected inflation increases with the investment horizon. This increase is especially strong for horizons up to 10 years. Inflation protection from housing is stronger when inflation is persistent, and the hedging capacities of housing regarding unexpected inflation are weak."> This article examines the inflation hedging capacity of the private home. We employ unique long-term data for inflation, house price dynamics and rents for Amsterdam dating back to 1814, allowing us to study total housing returns in different inflation regimes and for varying investment horizons. Our Amsterdam data show that homeownership's protection against actual and expected inflation increases with the investment horizon. This increase is especially strong for horizons up to 10 years. Inflation protection from housing is stronger when inflation is persistent, and the hedging capacities of housing regarding unexpected inflation are weak."> This article examines the inflation hedging capacity of the private home. We employ unique long-term data for inflation, house price dynamics and rents for Amsterdam dating bac">
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Inflation Protection from Homeownership: Long-Run Evidence, 1814–2008

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  • Dirk Brounen
  • Piet Eichholtz
  • Stefan Staetmans
  • Marcel Theebe
Abstract
type="main"> This article examines the inflation hedging capacity of the private home. We employ unique long-term data for inflation, house price dynamics and rents for Amsterdam dating back to 1814, allowing us to study total housing returns in different inflation regimes and for varying investment horizons. Our Amsterdam data show that homeownership's protection against actual and expected inflation increases with the investment horizon. This increase is especially strong for horizons up to 10 years. Inflation protection from housing is stronger when inflation is persistent, and the hedging capacities of housing regarding unexpected inflation are weak.

Suggested Citation

  • Dirk Brounen & Piet Eichholtz & Stefan Staetmans & Marcel Theebe, 2014. "Inflation Protection from Homeownership: Long-Run Evidence, 1814–2008," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 42(3), pages 662-689, September.
    • Handle: RePEc:bla:reesec:v:42:y:2014:i:3:p:662-689
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    Cited by:

    1. Chien-Wen Yang & Fang-Ni Chu & Wan-I Chen & Ming-Chi Chen, 2022. "Willingness to Purchase a House during Economic Lost Decades in Japanese Urban Housing Market," International Real Estate Review, Global Social Science Institute, vol. 25(3), pages 333-370.
    2. Malmendier, Ulrike M. & Steiny Wellsjo, Alex, 2020. "Rent or Buy? The Role of Lifetime Experiences on Homeownership within and across Countries," CEPR Discussion Papers 14935, C.E.P.R. Discussion Papers.
    3. Henry Koon Nam Lee, 2021. "The Inflation Hedging Effectiveness of Residential Property-Evidence from Three Emerging Asian Markets," International Real Estate Review, Global Social Science Institute, vol. 24(2), pages 221-251.

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