On the macroeconomic determinants of the housing market in Greece: a VECM approach

Panagiotidis, Theodore; Printzis, Panagiotis

doi:10.1007/s10368-016-0345-3

Cited by 62 publications

(51 citation statements)

References 59 publications

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“…Hence, Apergis (2003) found that the mortgage loan rate is among the key determinants of housing prices in the European Monetary Union. This was also confirmed by Agnello and Schuknechtin (2011) and Panagiotidis and Printzis (2015), who found the mortgage loans to be among the key factors that explain changes in house prices. Thus, the increase in the availability of loans can increase construction activities and eventually, the housing supply.…”

Section: Empirical Literaturesupporting

confidence: 69%

“…This is so because most of the houses are purchased through mortgage bonds, which are sensitive to changes in interest rates. When interest rates rise, the cost of borrowing also tends to rise and potential property buyers become discouraged (Panagiotidis and Printzis, 2015). Interest rates also play a key role in the demand for mortgages, as higher interest rates negatively affect the demand for a mortgage loan (borrowing) and eventually reduce the real price of a house (Xu and Tang, 2014).…”

Section: Conceptualisation Of Housing Supply and Demandmentioning

confidence: 99%

“…It is expected that the house price index and the new construction activity as a percentage of GDP are positively related (Borowiecki, 2009). It is also logical to assume that economic growth rate, consumer price index, mortgage as a percentage of GDP, nominal wage as a percentage of GDP and the population in the 15-64 cohort as a percentage of total population are all positively related to the endogenous variables (Borowiecki, 2009;Panagiotidis and Printzis, 2015;Sivitanides, 2015). However, short-term interest rates are expected to be negatively related to both endogenous variables (Panagiotidis and Printzis, 2015;Sivitanides, 2015).…”

Section: Econometric Modelsmentioning

confidence: 99%

“…The real estate market provides positive externalities in terms of protection, public health and economic development (Panagiotidis and Printzis, 2015). Thus, houses are often regarded as a good investment, considering that a property does not depreciate.…”

Section: Introductionmentioning

confidence: 99%

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Determinants of house prices and new construction activity: An empirical investigation of the Namibian housing market

Sunde¹,

Muzindutsi²

2017

The Journal of Developing Areas

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The demand for and supply of housing are heterogeneous and differ across countries, provinces and cities. In the Namibian context, the housing market has experienced a substantial increase in house prices. Such an unexpected growth rate in house prices suggests that the Namibian housing market may not be sustainable in the long term. This means that there is a high probability of a housing price bubble in Namibia if the house prices continue to increase. The aim of this study was to conduct an econometric analysis of endogenous and exogenous determinants of house prices and new construction activity in Namibia. This study also attempted to establish whether there is evidence of overvaluation of house prices in the Namibian housing market and this is important in identifying the possibility of a housing price bubble in Namibia. In addition, the study is relevant during the current period where Namibia is faced with a continuous increase in house prices. A restricted VAR model with a Johansen cointegration approach was used to analyse monthly data from January 2000 to December 2014. The selection of the data set was aimed at providing representatives for various housing demand drivers and housing supply determinants. For modelling on the supply side, new construction investment as a percentage of GDP was employed. The other variables incorporated as exogenous variables include the economic growth rate, the consumer price index, nominal wages as a percentage of GDP, the short-term interest rate, mortgage loans as a share of GDP and population in the 15-64 cohort as a percentage of GDP. Results show that the house price index in Namibia has proved more sensitive to changes in population, mortgage loans and inflation; whereas the construction activities were found to be more sensitive to the house price index and inflation. Granger causality results show that there is a bidirectional causality between the house price index and new construction activity in Namibia. The study therefore found evidence of overvaluation of house prices in the Namibian housing market, which may lead to a house price bubble in the Namibian economy. Namibian policymakers, through the Bank of Namibia, should come up with policies which ensure that the majority of mortgages given by the banks are for constructing new houses instead of financing the purchase of existing houses. JEL Classifications: C32; E37; D40

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Section: Empirical Literaturesupporting

confidence: 69%

Section: Conceptualisation Of Housing Supply and Demandmentioning

confidence: 99%

Section: Econometric Modelsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Determinants of house prices and new construction activity: An empirical investigation of the Namibian housing market

Sunde¹,

Muzindutsi²

2017

The Journal of Developing Areas

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“…This study concluded that construction companies might grow with specialization followed by diversification for stability and survival. Panagiotidis et al (2016) examined the Greek market in their study of the potential interdependencies between the housing price index and various macroeconomic determinants utilizing a VECM framework. This study found that housing market fluctuations had a considerable influence on the whole construction market, concluding that when the housing market is depressed, the financial sustainability of the construction company is vulnerable [26].…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Multinational Business Diversification on the Financial Sustainability of Construction Firms in Korea

2016

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This study investigated empirically whether multinational business diversification by Korean construction firms contributes to their financial sustainability using the vector error correction model. In this study, the current ratio and the debt ratio were used as proxy variables for financial sustainability. International construction orders and domestic construction orders were used as proxy variables for multinational business diversification for the analysis. Of the models used for analysis in this study, Model A used the current ratio and international and domestic construction orders, and Model B used the debt ratio and international and domestic construction orders. The time-series data utilized consisted of the quarterly data from Q1 of 2001 to Q4 of 2015. The results of the analysis imply that an increase in international construction orders undermines the financial viability of construction firms because of a decrease in the current ratio and an increase in the debt ratio. The results also show that the scrutinized analysis of profitability was insufficient because overseas project orders were not pursued based on a long-term business strategy but on short-term turnover. Therefore, Korean construction firms should recognize the overseas construction market as an independent market, not an alternative to the domestic market, and establish a long-term business strategy to enter overseas markets effectively to secure financial sustainability.

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Economic precariousness: A new channel in the housing market cycle

Arestis

González

2019

Int. J Fin Econ

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Demographic and institutional elements, as important drivers of the housing market, should not be neglected because it is not only financial and monetary elements that matter in the case of the housing market. In this context, one relationship, which still remains unclear, is the relationship between the housing and the labour markets. Some research has been undertaken to support the hypothesis that high rates of homeownership lead to high unemployment via increases in the reservation wage. However, further research is needed to address the possible implications of the institutional settings of the labour market in the dynamics of the housing market. The aim of this paper is to bring some light on the link between both markets. In particular, this contribution explains how the housing cycle could be “amplified” via a new channel, that is, economic precariousness, which is closely related to job insecurity. Subsequently, we provide evidence in the case of five developed economies, Ireland, the Netherlands, Spain, the United Kingdom, and the United States, over the period 1985–2013.

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On the macroeconomic determinants of the housing market in Greece: a VECM approach

Cited by 62 publications

References 59 publications

Determinants of house prices and new construction activity: An empirical investigation of the Namibian housing market

Determinants of house prices and new construction activity: An empirical investigation of the Namibian housing market

The Impact of Multinational Business Diversification on the Financial Sustainability of Construction Firms in Korea

Economic precariousness: A new channel in the housing market cycle

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