Many countries such as Australia, Ireland, Netherlands, United Kingdom (UK), Spain,
United States of America (USA) and South Africa (SA) among others have experienced
an increase in housing prices, since the late 1990s. In SA, the abrupt increase in
residential property prices, particularly during the period 1999 to 2007, resulted in an
improvement in the level of households’ net wealth position. Empirical investigations,
mainly from developed countries, provide evidence indicating that a house price increase
has a significant impact on the households’ wealth, and thus house price gains increase
housing collateral for homeowners which make it possible for them to take out equity in
the form of refinancing or selling of the house to finance consumption.
With the above in mind, this study investigates the relationship between aggregate
expenditure on consumption by households and residential house prices in South Africa.
Following the permanent-income/lifecycle hypothesis (PI-LCH), this study applies the
vector error model (VECM) into the 1980:Q1 to 2007:Q4 quarterly data sample. The
overall finding of the study indicates there is indeed a long-run positive relationship
between housing prices and consumption in South Africa. / Thesis (M.Com.)-University of KwaZulu-Natal, Westville, 2010.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:ukzn/oai:http://researchspace.ukzn.ac.za:10413/9941 |
| Date | 08 November 2013 |
| Creators | Twala, December Jacob. |
| Contributors | Mahomedy, A. C. |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
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