Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The effects of political, economic and financial components of country risk on housing prices in South Africa

The effects of political, economic and financial components of country risk on housing prices in... The housing market in South Africa has the potential to drive economic growth and attract foreign investment, but it can be affected by various risk factors. This paper aims to conduct an empirical analysis of the effect of country risk components on the housing market in South Africa.Design/methodology/approachLinear and nonlinear autoregressive distributed lag (ARDL) models were used to evaluate the effects of the economic, financial and political risk factors of country risk on the prices of different segments of houses based on 276 monthly time-series data from January1995 to December 2015.FindingsFirst, the results established that the three housing indices were more sensitive to political risk in the long run. Second, short run results showed that the three housing indices were largely influenced by their own preceding adjustments in the short run albeit minimal influences from political risk. Third, large housing segments indicated a higher magnitude of the country risk effect in South Africa.Originality/valueThis paper concluded that the response of housing prices to changes in the country risk components differed across the three segments of the housing market in South Africa. Consequently, this study presented the first comparison of the reactions of different housing segments to different components country risk. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Housing Markets and Analysis Emerald Publishing

The effects of political, economic and financial components of country risk on housing prices in South Africa

Loading next page...
 
/lp/emerald-publishing/the-effects-of-political-economic-and-financial-components-of-country-HZikYklWCY
Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1753-8270
eISSN
1753-8270
DOI
10.1108/ijhma-05-2020-0060
Publisher site
See Article on Publisher Site

Abstract

The housing market in South Africa has the potential to drive economic growth and attract foreign investment, but it can be affected by various risk factors. This paper aims to conduct an empirical analysis of the effect of country risk components on the housing market in South Africa.Design/methodology/approachLinear and nonlinear autoregressive distributed lag (ARDL) models were used to evaluate the effects of the economic, financial and political risk factors of country risk on the prices of different segments of houses based on 276 monthly time-series data from January1995 to December 2015.FindingsFirst, the results established that the three housing indices were more sensitive to political risk in the long run. Second, short run results showed that the three housing indices were largely influenced by their own preceding adjustments in the short run albeit minimal influences from political risk. Third, large housing segments indicated a higher magnitude of the country risk effect in South Africa.Originality/valueThis paper concluded that the response of housing prices to changes in the country risk components differed across the three segments of the housing market in South Africa. Consequently, this study presented the first comparison of the reactions of different housing segments to different components country risk.

Journal

International Journal of Housing Markets and AnalysisEmerald Publishing

Published: Jun 23, 2021

Keywords: South Africa; Financial risk; Political risk; ARDL; Country risk; Housing price; Economic risk; Small housing; Medium housing; Large housing

References