Real State as Housing and as Financial Investment: A First Assessment for Argentina
AbstractThere exists a widespread perception that Argentine households channel a large share of their savings into real state. However, no hard evidence has produced to date to measure how important this saving behavior is for the determination of housing prices vis-à-vis the traditional housing motive to buy property. In this light, this paper assesses for the first time whether housing prices in Argentina are mostly driven by housing or by investment motives. To this end, we devised a simple empirical test taking the form of an Equilibrium Correction model of apartment prices in Buenos Aires City on four explanatory variables that separately capture the housing motive (affordability and mortgage loans) and the investment motive (private bank deposits and income). It is found that private bank deposits and income have strong long and short run effects on housing prices behavior. Affordability only shows a short run effect, while mortgage loans turn out to be non-significant. These findings suggest, in line with the popular view on this topic, that real state fulfills a prominent role as a financial investment in Argentina.
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Bibliographic InfoPaper provided by Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata in its series Department of Economics, Working Papers with number 095.
Length: 24 pages
Date of creation: Nov 2012
Date of revision:
Housing demand; Financial investment; Equilibrium Correction model.;
Find related papers by JEL classification:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
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