Does loadshedding affect the housing market in South Africa? Some empirical evidence

Amogelang Marope and Andrew Phiri

International Journal of Housing Markets and Analysis, 2023, vol. 17, issue 3, 859-874

Abstract: Purpose - The purpose of this study is to quantify the impact of electricity power outages on the local housing market in South Africa. Design/methodology/approach - This study uses the autoregressive distributive lag (ARDL) and quantile autoregressive distributive lag (QARDL) models on annual time series data, for the period 1971–2014. The interest rate, real income and inflation were used as control variables to enable a multivariate framework. Findings - The results from the ARDL model show that real income is the only factor influencing housing price over the long run, whereas other variables only have short-run effects. The estimates from the QARDL further reveal hidden cointegration relationship over the long run with higher quantile levels of distribution and transmission losses raising the residential price growth. Research limitations/implications - Overall, the findings of this study imply that the South African housing market is more vulnerable to property devaluation caused by power outages over the short run and yet remains resilient to loadshedding over the long run. Other macro-economic factors, such as real income and inflation, are more influential factors towards long-run developments in the residential market. Originality/value - To the best of the authors’ knowledge, this is the first study to examine the empirical relationship between power outages and housing price growth.

Keywords: Electricity distribution and transmission losses (EDTL); Power outages; Loadshedding; House prices; South Africa; Quantile autoregressive distributive lag (QARDL) model (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijhmap:ijhma-10-2022-0148

DOI: 10.1108/IJHMA-10-2022-0148

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