Inflation Protection from Homeownership: Long‐Run Evidence, 1814–2008 |
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| Authors: | Dirk Brounen Piet Eichholtz Stefan Staetmans Marcel Theebe |
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| Affiliation: | 1. Department of Economics, Tilburg University, , 5000 LE, Tilburg, The Netherlands;2. Finance Department, Maastricht University, , 6200 MD, Maastricht, The Netherlands;3. Finance Department, University of Amsterdam, , 1018 TV, Amsterdam, The Netherlands |
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| Abstract: | 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. |
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