An empirical study on the relationship of negative real interest rates and house prices in the Philippines
The importance of negative real interest rates in accounting for the house prices has been recognized as an important risk to economic stability. This paper aimed to empirically show the importance of real interest rates as well as other macroeconomic factors in explaining changes in house prices in...
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| Main Authors: | , , , |
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| Format: | text |
| Language: | English |
| Published: |
Animo Repository
2013
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| Subjects: | |
| Online Access: | https://animorepository.dlsu.edu.ph/etd_bachelors/18521 |
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| Institution: | De La Salle University |
| Language: | English |
| Summary: | The importance of negative real interest rates in accounting for the house prices has been recognized as an important risk to economic stability. This paper aimed to empirically show the importance of real interest rates as well as other macroeconomic factors in explaining changes in house prices in the Philippines represented by its house price index (HPI), which has a value of 100 in 2000. The relevance of positive and negative real interest rates was also examined in order to draw inference. The time series data from the first quarter of 1995 to the fourth quarter of 2010 obtained for this study were analyzed through a first-order autoregressive model and the ordinary least squares model, employing the classical linear regression model using Gretl as well as conducting different tests to verify if the assumptions of the model hold true. The regression models for this study was able to provide evidence as to the effect of macroeconomic factors including real interest rate regimes on property prices in the country. Consequently, results in this study showed that the negative impact from real interest rates were almost double when the real interest rates were negative as compared to positive real interest rates. |
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