Title: Housing regimes and macroeconomy in South Africa: a tripartite analysis

Authors: Adefemi A. Obalade; Lusanda Mbatha; Nkululeko Radebe; Nosipho Dlamini; Nqobile Dludla; Paul-Francois Muzindutsi

Addresses: Department of Finance, University of the Western Cape, Private Bag X17/Robert Sobukwe Rd, BELLVILLE/Bellville South, 7535, South Africa ' School of Accounting, Economics and Finance, College of Law and Management, University of KwaZulu-Natal, Westville Campus, Bag X 5400, Durban, 4000, South Africa ' School of Accounting, Economics and Finance, College of Law and Management, University of KwaZulu-Natal, Westville Campus, Bag X 5400, Durban, 4000, South Africa ' School of Accounting, Economics and Finance, College of Law and Management, University of KwaZulu-Natal, Westville Campus, Bag X 5400, Durban, 4000, South Africa ' School of Accounting, Economics and Finance, College of Law and Management, University of KwaZulu-Natal, Westville Campus, Bag X 5400, Durban, 4000, South Africa ' School of Accounting, Economics and Finance, College of Law and Management, University of KwaZulu-Natal, Westville Campus, Bag X 5400, Durban, 4000, South Africa

Abstract: The basic human needs recognised by the United Nations (UN) include housing. We examined housing regimes and the impact of macroeconomic variables, namely, inflation, interest rates, gross domestic product, exchange rate, money supply, rent, and unemployment rate on different segments of the housing market. The study used Markov-switching regression models to examine the effect of selected macroeconomic variables on the three segments of housing, namely small, medium, and large houses, based on quarterly time series from the first quarter of 1995 to the fourth quarter of 2020. The results show that the effect of macroeconomic variables depends on the housing segments, whether small, medium or large. In addition, the small and medium housing indices stay longer in the bear regime, while the large housing index stays longer in the bull regime. The study concludes that the impact of the key macroeconomic variables on housing price indices changes with regimes. Domestic and international stakeholders must consider changing regimes and the regime-specific effect of macroeconomic factors on investment in the housing market.

Keywords: real estate; market regimes; macroeconomic factors; housing segments ; Markov-switching model; South Africa.

DOI: 10.1504/IJMEF.2023.131914

International Journal of Monetary Economics and Finance, 2023 Vol.16 No.3/4, pp.179 - 187

Received: 12 Jul 2022
Accepted: 12 Jan 2023
Published online: 04 Jul 2023 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article