Housing market dynamics in a small open economy: Do external and news shocks matter?

•We develop a DSGE model to study housing market dynamics in a small open economy.•External and news shocks mainly drive fluctuations in housing prices and investment.•Contemporaneous shocks to foreign housing preferences and terms of trade matter.•News shocks to consumption-goods technology, housing preference and TOT also matter.•External shocks have larger spillover effect on housing prices than domestic shocks.