The impact of inflation and interest rates on real estate indices in the US and EU

Abstract

This paper examines the relationship between macroeconomic factors such as interest rates and inflation, and the performance of real estate indices in the United States and the European Union. The analysis is conducted using linear regression on monthly data from the beginning of 2010 until the end of 2022. The obtained results supported the hypothesis that inflation has a positive impact on real estate indices in both markets. However, the hypothesis that interest rates have a negative impact on real estate indices was supported in Europe but not in the United States, potentially due to different economic and financial conditions in the two markets. The study of the relationship between inflation, interest rates and real estate index provides important insights into the broader economic environment. Inflation and interest rates are key indicators of the overall health of the economy, and changes in these variables can signal changes in the broader economic environment. Therefore, understanding the relationship between these variables and real estate indices can provide important overview of the current economic situation and potential future trends.