Real State as Housing and as Financial Investment: A First Assessment for Argentina

Ricardo Bebczuk () and Maria Garegnani ()

Department of Economics, Working Papers from Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata

Abstract: There 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.

Keywords: Housing demand; Financial investment; Equilibrium Correction model. (search for similar items in EconPapers)
JEL-codes: C32 G21 R21 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2012-11
New Economics Papers: this item is included in nep-ure
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Working Paper: Real State as Housing and as Financial Investment: A First Assessment for Argentina (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:lap:wpaper:095

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