Relationship between Residential Property Price Index and Macroeconomic Indicators in Dubai Housing Market

International Journal of Strategic Property Management, Vol.16, No.1, 2012, pp.71-84

15 Pages Posted: 12 Apr 2012 Last revised: 11 Dec 2012

See all articles by Ali Hepsen

Ali Hepsen

Istanbul University - Faculty of Business Administration, Department of Finance

Metin Vatansever

Yildiz Technical University

Date Written: April 12, 2012

Abstract

The main purpose of this study is to investigate whether there is a long-run relationship between macroeconomic indicators and property price index in Dubai. This paper uses the monthly data for the eight year period from January 2003 to December 2010. In order to identify long term equilibrium between property price index and macroeconomic indicators, cointegration analyses are utilized for the study. The results of the empirical analyses show that there is a long term positive equilibrium relationship not only between REIDIN.com Dubai residential Property Price Index (DRPPI) and gold prices; but also between DRPPI and volume of total direct foreign trade. On the other hand, there is a negative long-run relation-ship between DRPPI and the number of completed residential units. In addition, there is a significant positive relation between DRPPI and the first lag of DRPPI and also the first lag of error term. Our paper is the first academic study that identifies this relationship in Dubai.

Keywords: Dubai, Real Estate, Residential Property Price Index, Macroeconomic Indicators, Cointegration

JEL Classification: R21, R31, G01

Suggested Citation

Hepsen, Ali and Vatansever, Metin, Relationship between Residential Property Price Index and Macroeconomic Indicators in Dubai Housing Market (April 12, 2012). International Journal of Strategic Property Management, Vol.16, No.1, 2012, pp.71-84 , Available at SSRN: https://ssrn.com/abstract=2038967

Ali Hepsen (Contact Author)

Istanbul University - Faculty of Business Administration, Department of Finance ( email )

Istanbul
Turkey

Metin Vatansever

Yildiz Technical University ( email )

Davutpasa Mh., Esenler
Besiktas, Istanbul 80750
Turkey

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