The Relationship between Interest Rates, Income, GDP Growth and House Prices

Xu, Ting

doi:10.22158/rem.v2n1p30

Cited by 29 publications

(24 citation statements)

References 3 publications

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“…However, this might change in a few years, depending on global economic development. In contrast, the purchase of land is a very hot topic now (#6) [80,81], with limited availability of unoccupied land meaning that economic risks play an important role when selecting potential sites (#5). In times of accommodative monetary policies and low interest rates, the risk related to inflation is negligible (#6).…”

Section: Discussionmentioning

confidence: 99%

Enhanced Cash Flow Valuation in Real Estate Management by Integrating Innovative Materials and Risk Assessment

et al. 2020

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Environmental criteria have become a critical issue for the evaluation of projects and products, particularly for businesses with extensive life cycles. Sustainability criteria and project risk management are underexplored in real estate development, and thus endanger business survival. The aim of this article is to improve the understanding of uncertainties in the real estate industry by using a stochastic risk assessment approach and to broaden the risk assessment methodology. Thus, this article investigates the importance of material selection regarding external and project risk for real estate development. Aside from conventional projects, risks are analyzed for projects with high-quality materials (HQMs) that are characterized by environmental benefits. In following a mixed method approach, we began by conducting interviews with developers about the most important risks, and later incorporating these factors into a stochastic cash-flow model. Finally, we illustrated our findings in a case study. Overall, the highest risks were shown from resource prices and changing regulations, while the rankings of the two materials differ slightly; HQMs rank higher on the created risk index than conventional materials. The cash-flow model shows that conventional materials perform slightly better than HQMs, although uncertainties within the calculations are similar. The article contributes to risk management and decision-making for real estate projects by providing insights into the discussion and analysis of the financial performance of sustainable construction material and design that might be crucial for disruptive innovations. We present a model that integrates environmental and long-term effects in the cash-flow evaluation of real estate projects, thereby increasing managerial flexibility.

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Section: Discussionmentioning

confidence: 99%

Enhanced Cash Flow Valuation in Real Estate Management by Integrating Innovative Materials and Risk Assessment

et al. 2020

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“…Previous studies indicate that Gross Domestic Product (GDP), money supply, inflation, lending rates, unemployment rates, and stock price are several variables that focus on explaining residential property prices. Real Gross Domestic Product (GDP) is widely recognized as an important economic factor determinant of residential property price movements (Case & Glaeser, 2000;De Wit & Van Dijk, 2003;Ong, 2013;Xu, 2017). According to Tsatsaronis and Zhu (2014), real GDP growth has information that contains direct measures of household income and housing prices.…”

Section: Macroeconomic Drivers Towards Residential Property Pricesmentioning

confidence: 99%

“…Lending Rate is another important factor determinant of residential property price volatility (Harris, 1989;Qi, 2007;Xu, 2017). Harris (1989) found that housing prices are affected by lending rates.…”

Section: Macroeconomic Drivers Towards Residential Property Pricesmentioning

confidence: 99%

“…Generally, the lending rate could encourage household spending and affect the residential property price. According to Xu (2017), an increase in the lending rate will increase the residential property prices and this consequently will encourage an increase in household's demand for bank credit. However, Yun Joe Wong, Man Eddie Hui and Seabrooke (2003) found that high lending rates could increase the household's burden on actual debt payments.…”

Section: Macroeconomic Drivers Towards Residential Property Pricesmentioning

confidence: 99%

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A Dynamic Relationship Between Consumer Confidence and Residential Property Price: Empirical Evidence for Malaysia

Ismail

Nayan

2021

IJPS

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In recent years, the real estate market has become a major interest for economists and researchers. In general, property prices are influenced by the supply and demand of the real estate market. In addition to the individual's positive expectation of the real estate market would raise the demand for housing and hence, house price indexes would increase. This study provides new knowledge on how consumer confidence in the housing industry affects residential property prices in Malaysia. Previous studies on the effect of consumer perception towards residential property in Malaysia are scarce. Therefore, the objective of this study is to determine how consumer confidence affect residential property price in Malaysia. Our study differs by focusing on the effect of consumer confidence on the housing industry and macroeconomic drivers toward residential property prices in Malaysia over the period 2004:Q1 to 2018:Q4. By using the autoregressive distributed lag (ARDL) test, the empirical results have shown the presence of long-run adjustment and indicate that consumer confidence towards the housing industry and many macroeconomic variables significantly affect residential property prices. From this finding, we have suggested that government and policymakers should be able to understand consumer confidence in the housing industry to increase consumer satisfaction and to improve consumer sentiment towards the residential property market in Malaysia.

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“…The greater number of the studies emphasized the strong relationship between property prices and GDP, as well as demographic factors (Bujang et al , 2010; Gao and He, 2014; Zandi et al , 2015; Aizenman et al , 2016; Reed, 2016; Xu, 2017). However, there is no consensus among various authors and analysts regarding this issue and outcomes are quite complicated.…”

Section: Literature Reviewmentioning

confidence: 99%

Determinants of housing prices in Baku: empirical analyses

Aliyev

Amiraslanova

Bakirova

et al. 2019

IJHMA

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Purpose This paper aims to reveal major factors affecting housing prices (flats and houses) in Baku, the capital of Azerbaijan Republic. Design/methodology/approach Based on cross-sectional data set of 497 flats and 443 houses, polynomial regression models are estimated for flats and houses separately. Regression models are estimated by using ordinary least squares. Findings Location, largeness, repair level and existence of bill of sale are major price determinants for flats. For houses, number of rooms also matters. Findings reveals that houses are land intensive (more floors, less land area) toward city center, and vice versa. Price difference due to existence of bill of sale diminishes significantly toward the surrounding areas. Research limitations/implications The data set represents view of sellers and does not take into consideration price bargaining in time of sale; probability of information asymmetries exists which not could accounted for, and urgency of sale is not considered. Practical implications Estimation results can be used for housing valuation by real estate market participants and investors. Social implications Research findings reveal importance of bill of sale as a major price determinant and expected to attract policymakers’ attention to solve such a big social problem. Additionally, models can be based for price estimations in Baku housing market. Originality/value The study contributes to the literature by empirically analyzing housing market in Baku, Azerbaijan. Research produces new practically valuable findings.

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The Relationship between Interest Rates, Income, GDP Growth and House Prices

Abstract: Abstract

Cited by 29 publications

References 3 publications

Enhanced Cash Flow Valuation in Real Estate Management by Integrating Innovative Materials and Risk Assessment

Enhanced Cash Flow Valuation in Real Estate Management by Integrating Innovative Materials and Risk Assessment

A Dynamic Relationship Between Consumer Confidence and Residential Property Price: Empirical Evidence for Malaysia

Determinants of housing prices in Baku: empirical analyses

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