The sources of housing prices growth in Kenya
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Date
2018
Authors
Stephen Githae Njaramba, Stephen Githae
Gachanja, Paul
Mugendi, Charles
Journal Title
Journal ISSN
Volume Title
Publisher
International Peer Reviewed Journals and Books (IPRJB)
Abstract
Purpose: The objective of the study was to analyze the sources of housing prices growth in
Kenya
Methodology: The study used time series data for the period 1960 to 2015 and adopted an
ARDL modeling approach. The model was useful as housing prices behaves differently from
other goods’ prices, and as such, previous values of housing prices were necessary in
estimations. The model also suited for small sample size and for its capacity to estimate short-run
and long-run dynamics. The ARDL model also distinguishes dependent and explanatory
variables.
Results: The study findings showed that the sources of housing prices growth included
household consumption expenditure, construction cost and property taxes both in the short-run
and long-run. Private capital inflows and households’ indebtedness have a positive transitory
effect to the housing prices. Against the popular view, supply of housing have no effect on
housing prices.
Unique contribution to theory, practice and policy: The Kenya National Housing Corporation
needs to make public and encourage the use of readily available alternative building material
besides the conventional material while not compromising on quality to address the overreaction
of housing prices.
Description
Research Article
Keywords
Housing Prices, Macroeconomic Stability, Housing Price Boom and Affordability
Citation
International Journal of Economics Vol.3, Issue 1, No.2, pp 7 - 30, 2018