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

Author

Listed:
  • 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.

Suggested Citation

  • Chowdhury, Mamta & Mallik, Girijasankar, 2004. "Effects of Housing Allowances on Housing Prices in Australia: A Cointegration Analysis," Economic Analysis and Policy, Elsevier, vol. 34(1), pages 37-51, March.
    • Handle: RePEc:eee:ecanpo:v:34:y:2004:i:1:p:37-51
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    Citations

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    Cited by:

    1. Shuping Shi & Arafat Rahman & Ben Zhe Wang, 2020. "Australian Housing Market Booms: Fundamentals or Speculation?☆," The Economic Record, The Economic Society of Australia, vol. 96(315), pages 381-401, December.
    2. Konstantin A. Kholodilin & Sebastian Kohl & Florian Müller, 2023. "Government-Made House Price Bubbles? Austerity, Homeownership, Rental, and Credit Liberalization Policies and the “Irrational Exuberance” on Housing Markets," Discussion Papers of DIW Berlin 2061, DIW Berlin, German Institute for Economic Research.
    3. Dominic Crowley & Shuyun May Li, 2016. "An NPV Analysis of Buying versus Renting for Prospective Australian First Home Buyers," The Economic Record, The Economic Society of Australia, vol. 92(299), pages 606-630, December.
    4. David M. Williams, 2009. "House prices and financial liberalisation in Australia," Economics Series Working Papers 432, University of Oxford, Department of Economics.
    5. Chen, Mengkai & Liu, Tong & Wang, Xianzhu, 2024. "The effect of the housing provident fund on housing affordability in Urban China: A quantitative analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 93(C), pages 1-11.

    More about this item

    Keywords

    Homes; Housing;

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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