Title: Macroeconomic causes of variance in house and property prices

Authors: Larry Allen

Addresses: Lamar University, P.O. Box 10045, L.U. Station, Beaumont, TX 77710, USA

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.

Keywords: housing markets; house price growth; property prices; house prices; price variance; macroeconomic fundamentals; macroeconomic imbalances; current account; public debt; sub-prime crisis; GDP gap; gross domestic product; Australia France Germany Japan UK; United Kingdom; USA; United States; investment; savings.

DOI: 10.1504/IJBIR.2017.082092

International Journal of Business Innovation and Research, 2017 Vol.12 No.3, pp.377 - 385

Received: 08 Dec 2014
Accepted: 27 Jan 2015
Published online: 07 Feb 2017 *

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