Macroeconomic determinants of housing demand in Saudi Arabia: an autoregressive distributed lag approach

Yusuf Opeyemi Akinwale, Ibrahim Abiodun Oladapo, Olawale Rafiu Olaopa and Dina Gabbori

International Journal of Housing Markets and Analysis, 2024, vol. 19, issue 2, 453-467

Abstract: PurposeThis study aims to investigate the macroeconomic factors influencing housing demand in Saudi Arabia using quarterly data for the period 2010 Q1–2024 Q2.Design/methodology/approachThe autoregressive distributed lag bounds test and vector error correction model are used to determine the dynamic relationship between the macroeconomic factors.FindingsThe results reveal that the F-statistic value of 4.2043 is higher than the upper bound of the critical values at 5% level of significance, indicating long-run association among the series. While there is a negative and significant influence of interest and inflation rates on housing demand, income per capita and population have a positive and significant influence on housing demand. Similar result is found for the short run analysis except income per capita which has positive but insignificant impact. Moreso, the population seems to be very crucial to housing demand in both short-run and long-run periods.Social implicationsThe outcome of the study has important policy implications by enjoining the policymakers in Saudi Arabia to consider a decisive management of monetary and fiscal policies to ensure that inflation and interest rates for housing are kept at a low level to encourage housing demand. Also, adequate policies should be put in place to ensure housing/property affordability that matches the increasing population due to tourism, urbanisation and growing birth rate.Originality/valueStudies on the macroeconomic determinants of housing demand are less explored as most studies dwell more on social and demographic factors despite the importance of macroeconomic factors towards house ownerships. There is a dearth of related studies in Saudi Arabia.

Keywords: Macroeconomic determinants; Housing demand; Interest rate; Inflation rate; Income; Price; Saudi Arabia (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijhmap:ijhma-10-2024-0158

DOI: 10.1108/IJHMA-10-2024-0158

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