This paper investigates the effectiveness of monetary policy on house prices in South
Africa, before and after financial liberalisation, with financial liberalisation being
identified with the recommendations of the De Kock Commission (1985). Using both
impulse response and variance decomposition analysis performed on SVARs, we find
that, irrespective of house sizes, during the period of financial liberalisation, interest rate
shocks had relatively stronger effects on house price inflation. However, given that the
size of these effects were nearly negligible, the result seems to indicate that house prices
are exogenous, and, at least, are not driven by monetary policy shocks.