Bulletin of Monetary Economics and Banking

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We investigate the long-term cointegration relation between residential property prices, household credit expansion, and household income expectations and identify the channels through which income expectation impacts residential property prices in the short term for Indonesia and Brazil. We find that improved income expectations raise the demand for credit, impacting residential property prices. Similar improvementsin income expectations also serve as important indicators for credit policy decisions, making more funding available to the household sector against the backdrop of rising property prices. In the short run, property prices respond significantly to one-time shocks in income expectations in Indonesia, while credit to households responds positively to property prices and private consumption expenditures in Brazil.

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