DETERMINANTS OF HOUSING PRICES IN AN OIL BASED ECONOMY
Journal Title: Asian Economic and Financial Review - Year 2016, Vol 6, Issue 5
Abstract
This paper is trying to analyze the determinants of housing prices in an oil-based economy, where the price of oil plays a major role in such economies. It is also common to find that government spending represents the most important component of aggregate spending and that governments usually play a central role in the provision of public services to citizens at substantial subsidies, housing is on top of them. The paper is trying to identify the role played by oil price in the housing market in Kuwait. The model is composed of four major determinants of house prices including the price of oil, government expenditures, inflation rate and interest rate. Results confirm the role played by the four factors in determining the price of houses. Variance decomposition indicates that up to 10 quarters, 94.3% of the forecast error variance in housing prices is explained by house price itself, whereas, only 2.3%, 1.6%, 1.5% and 0.8% are explained by Interest rates, inflation rates, government expenditures, and price of oil respectively. The oil price does not seem to play an important impact on price changes in Kuwait. One important recommendation is for the government to relax its monopoly on land and invite the private sector to come up with housing solutions to increase the supply of houses in the private housing market and reduce the upward pressures on house prices.
Authors and Affiliations
Humoud Almutairi*| Assistant Professor at Kuwaiti University, El-Sakka, M. I. T. | Professor of Economics, Kuwait University Kuwait
Keywords
Related Articles
- EP ID EP2273
- DOI -
- Views 620
- Downloads 40
IMPOSITION OF R&D SUBSIDY IN A PRODUCT DIFFERENTIATED DUOPOLISTIC INDUSTRY
This study analyzes an imposition of government R&D investment subsidy in the standard model of vertical product differentiation with two products in a duopolistic competition. We show that the imposition of distinct sub...
COASIAN THEOREM, PUBLIC DOMAIN, AND PROPERTY RIGHTS PROTECTION
In this paper, the expressions of Coasian Theorem and the concept of public domain are discussed at the beginning. Based on it, this paper derived a mathematic logic about Coasian Theorem. At last, it proves that if the...
UNEMPLOYMENT, INCOME INEQUALİTY AND POVERTY: THE HALLMARKS OF THE AFRİCA’S LARGEST AND STRONGEST ECONOMY; NİGERİA
Nigeria indeed has one of the world?s highest economic growth rates especially from the opening years of the current century. The economy has been one of the vibrant ones as a result of the abundance of human and natural...
EVALUATION OF THE EFFECT OF LIQUIDITY GROWTH ON SAVING RATE IN THE DEVELOPING COUNTRIES
The role of savings in determining economic growth and investment is among issues that have always been considered in the formulation of policy and economic theories. This fact has been accepted that it is a quite necess...
A CAUSALITY TEST ON THE GIBSON PARADOX IN TURKEY
In general, it is believed that interest rate is an important instrument for central banks while struggling with inflation. However, Gibson Paradox tells the story in a different way. So how does it work in reality? This...