Macroeconomic causes of variance in house and property prices
by Larry Allen
International Journal of Business Innovation and Research (IJBIR), Vol. 12, No. 3, 2017

Abstract: This paper is a frankly empirical piece with the purpose of explaining the variance of housing prices as a function of macroeconomic fundamentals. The analysis is based upon data from six advanced countries, Australia, France, Germany, Japan, the UK, and the USA. The sample range stretches from 2001 thru 2012. A panel regression procedure is applied to the dataset. The findings suggest that housing price variance can be interpreted as a function of important macroeconomic variable. These macroeconomic variables include monetary growth, first differences in the current account as a percent of GDP, first differences in the imbalance between investment and savings, and the public debt as a percent of GDP. The rate of growth of housing prices also plays a role in individual countries.

Online publication date: Tue, 07-Feb-2017

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