Macroeconomic Determinants of Housing Price. Case of the Eurasian Economic Union (EAEU) Countries (1998-2018)

Abstract

Housing price determinants have become a subject of growing analytical work. The interest in this field was caused by rise in housing prices in many countries around the world including Eurasian Economic Union (EAEU) and significant role of housing market in the economy. The large value of national wealth is contained in real estate which is reflected in the structure of gross domestic product (GDP). Housing is an essential element of the economy and understanding the drivers of house price cycles, and ways to moderate them, is important for economic stability. The purpose of the master thesis is to examine the impact of macroeconomic factors such as GDP per capita, Remittances, Inflation, Unemployment, Population Growth, Average Oil Price, Real Interest Rate, New Construction, and Crisis (dummy variable) on housing prices. The survey is done for the EAEU countries (Kyrgyz Republic, Kazakhstan, Russia, Belarus, Armenia) for the period from 1998 to 2018 with total 105 numbers of observations. The methodological approach is based on panel data analysis. Fixed effect regression model and Arellano-Bond linear dynamic panel model have been used for analysis of data. According to results of survey house prices of previous year, inflation, real interest rate and crisis effect have a significant effect on housing prices in EAEU countries.