Version 1
: Received: 28 December 2020 / Approved: 29 December 2020 / Online: 29 December 2020 (08:26:12 CET)
How to cite:
Ahmed, D.E.E.A. Impact of Macroeconomic Variables on Housing Prices in Saudi Arabia: A VAR Approach. Preprints2020, 2020120715. https://doi.org/10.20944/preprints202012.0715.v1
Ahmed, D.E.E.A. Impact of Macroeconomic Variables on Housing Prices in Saudi Arabia: A VAR Approach. Preprints 2020, 2020120715. https://doi.org/10.20944/preprints202012.0715.v1
Ahmed, D.E.E.A. Impact of Macroeconomic Variables on Housing Prices in Saudi Arabia: A VAR Approach. Preprints2020, 2020120715. https://doi.org/10.20944/preprints202012.0715.v1
APA Style
Ahmed, D.E.E.A. (2020). Impact of Macroeconomic Variables on Housing Prices in Saudi Arabia: A VAR Approach. Preprints. https://doi.org/10.20944/preprints202012.0715.v1
Chicago/Turabian Style
Ahmed, D.E.E.A. 2020 "Impact of Macroeconomic Variables on Housing Prices in Saudi Arabia: A VAR Approach" Preprints. https://doi.org/10.20944/preprints202012.0715.v1
Abstract
This paper examines how housing prices are determined by macroeconomic factors in Saudi Arabia, namely, Gross Domestic Product Per capita (GDPP), Consumer Prices Index (CPI), and Unemployment Rate (UNEMP). Quarterly data for a period (2014q1 – 2019q4) were collected from publications of Saudi Arabian Monetary Authority (SAMA). Vector Autoregression Analysis (VAR) is employed to capture the dynamic effect of the variables on housing prices. Granger Causality, Variance Decomposition and Impulse response function are also used. The results show that housing prices are insignificantly and positively related to GDPP, whereas it is negatively related to both (CPI & UNEMP). Only CPI has a significant relationship. The three variables, jointly, have Granger causality on HPI. Variance decompositions show that CPI is the variable with the highest explanatory power over the variation of housing prices, followed by GDPP and the UNEMP respectively indicating that CPI is the most influential determinants for housing prices.
Keywords
CPI; GDP; real estate; unemployment; VAR
Subject
Social Sciences, Anthropology
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
