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Effects of Housing Allowances on Housing Prices in Australia: A Cointegration Analysis

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Author Info

  • Chowdhury, Mamta

    (University of Western Sydney, Blacktown)

  • Mallik, Girijasankar

    (University of Western Sydney, Campbelltown)

Abstract

This paper investigates the impact of the housing allowance for first homebuyers provided by the Federal government, together with nominal interest rate and employment on housing prices in Australia using cointegration analysis and an error correction model. Granger causality is also tested. Results show that the growth rates in average house prices for established houses and for project homes are Granger caused jointly by employment growth and interest rate increases. The cointegration analysis shows that housing prices are positively affected by falling interest rates and rising employment. The recent housing allowance is found to have a positive and significant effect on housing prices in Australia.

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Bibliographic Info

Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

Volume (Year): 34 (2004)
Issue (Month): 1 (March)
Pages: 37-51

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Handle: RePEc:eap:articl:v:34:y:2004:i:1:p:37-51

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Keywords: Homes; Housing;

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References

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  1. N. Gregory Mankiw & David N. Weil, 1988. "The Baby Boom, The Baby Bust, and the Housing Market," NBER Working Papers 2794, National Bureau of Economic Research, Inc.
  2. Bover, Olympia & Muellbauer, John & Murphy, Anthony, 1988. "Housing, Wages and UK Labour Markets," CEPR Discussion Papers 268, C.E.P.R. Discussion Papers.
  3. Engle, Robert F. & Yoo, Byung Sam, 1987. "Forecasting and testing in co-integrated systems," Journal of Econometrics, Elsevier, vol. 35(1), pages 143-159, May.
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Cited by:
  1. Williams, David M, 2009. "House prices and financial liberalisation in Australia," MPRA Paper 15212, University Library of Munich, Germany.

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