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Determinants of house price volatility in Namibia

Teresia Kaulihowa (Department of Economics, Faculty of Economic and Management Science, University of Namibia, Windhoek, Namibia)
Katrina Kamati (University of Namibia, Windhoek, Namibia)

International Journal of Housing Markets and Analysis

ISSN: 1753-8270

Article publication date: 18 March 2019

Issue publication date: 27 August 2019

Abstract

Purpose

This paper aims to test the volatility and analyses the macroeconomic determinants of house price volatility in Namibia over the period 2007 Quarter 1 to 2017 Quarter 2. It further explores the causal relations between house price volatility and its determinants.

Design/methodology/approach

The study used autoregressive conditional heteroskedastic and generalized autoregressive conditional heteroskedastic models to test for volatility. The vector error correction model was used to analyse the determinants and causal relations.

Findings

The results support the hypothesis that house prices in Namibia exhibits persistent volatility. It was further established that past period volatility’ GDP and mortgage loans are the key determinants of house price volatility. Additionally’ there exists unidirectional causality from GDP and mortgage loans to house price volatility.

Practical implications

Policy implications emanating from the study implies that macroeconomic fundamentals should be monitored closely to mitigate the issues of house price volatility.

Originality/value

The study is the first of its kind in Namibia to address the pertinent issues of ever increasing housing prices.

Keywords

Citation

Kaulihowa, T. and Kamati, K. (2020), "Determinants of house price volatility in Namibia", International Journal of Housing Markets and Analysis, Vol. 12 No. 4, pp. 807-823. https://doi.org/10.1108/IJHMA-10-2018-0077

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited