House Prices, Monetary Policy and Commodities: Evidence from Australia*

Monetary policy and commodity prices are key drivers of Australian house prices, but endogeneity between these variables complicates empirical research. To address this, we use local projection methods instrumental for estimation. We find that one standard deviation expansionary monetary shocks increase at peak by 1.5 per cent 1.4 cent, respectively. Using geographically disaggregated panel data, exploit the heterogeneity in price responses to study different channels through which affect housing markets. both have significant effects on markets income channels.