Factors contributing to the fluctuations in residential construction in Iran

Hassan Gholipour Fereidouni


Abstract

Residential construction is one of the most important pillars of Iran’s economy. Although this sector had an increasing trend over the past two decades, however, the growth rate of residential construction was very volatile. The purpose of this paper is to empirically investigate those factors contributing to this fluctuation over the 1991:Q2-2008:Q4. By applying cointegration approach, the empirical results show that housing prices, construction costs, GDP and gold prices are important factors to explain swings in residential construction in Iran.  

Keywords

Housing, Construction Costs, Residential Construction, Cointegration Approach, Iran

Full Text

PDF

References

Abbasinezhad, H. and Yari, H. (2009) 'The effect of oil shocks on housing prices', Faslnamheye pazhoheshhaye eghtesadi [Quarterly Economic Research], 1, Spring, 59-77

Al-Abdulrazag, B.A. (2003) 'The determinants of private construction investment in Jordan: an empirical study (1972-1996)', Damascus University Journal, 19, 15-35

Akintoye, A. and Skitmore, M. (1994) 'Models of UK private sector quarterly construction demand', Construction Management and Economics, 12 (1), 3-13, http://dx.doi.org/10.1080/01446199400000002

Brissimis, S. N. and Vlassopoulos, T. (2009) 'The interaction between mortgage financing and housing prices in Greece', The Journal of Real Estate Finance and Economics, 39 (2), 146-164, http://dx.doi.org/10.1007/s11146-008-9109-3

Borowiecki, K. J. (2009) 'The determinants of house prices and construction: an empirical investigation of the Swiss housing economy', International Real Estate Review, 12 (3), 193-220

Coulson, E. (1999) 'Housing inventory and completion', Journal of Real Estate Finance and Economics, 18 (1), 89-106, http://dx.doi.org/10.1023/A:1007789413307

Crˆotte, A., Noland, R. B. and Graham, D. J. (2010) 'An analysis of gasoline demand elasticities at the national and local levels in Mexico', Energy Policy, 38 (8), 4445-4456, http://dx.doi.org/10.1016/j.enpol.2010.03.076

Dickey, D. and Fuller, W. (1981) 'Likelihood ratio statistics for autoregressive time series with a unit root', Econometrica, 49 (4), 1057-1072, http://dx.doi.org/10.2307/1912517

Donatos, G. (1995) 'A quantitative analysis of investment in new housing in Greece', Urban Studies, 32 (9), 1475-1487, http://dx.doi.org/10.1080/00420989550012357

GMID (2011) Global Market Information Databases. available at: http://www.portal.euromonitor.com/Portal/Pages/Magazine/WelcomePage.aspx

He, C., Wang, J. and Cheng, S. (2009) 'What attracts foreign direct investment in China's real estate development?', The Annals of Regional Science, 46 (2), 267-293, http://dx.doi.org/10.1007/s00168-009-0341-4

Iran Economics (2004) 'Chehreh bazar maskan Iran', Mahnameh Eghtesade Iran [Monthly Economy of Iran], 64, available at http://www.iraneconomics.net/fa/printarticle.asp?id=212

Lopez, J (1998) 'The construction industry and macroeconomy in Sub-Saharan Africa post 1970', Construction Management and Economics, 16 (6), 637-649, http://dx.doi.org/10.1080/014461998371935

Maddala, G.S. and Kim, I. (1998) Unit Roots, Cointegration, and Structural Change, Cambridge University Press, Cambridge

Masron, T. A. and Gholipour, H. F. (2010) 'Performance and Diversification Benefits of Housing Investment in Iran', International Journal of Economics and Finance, 2 (4), 7-11, http://dx.doi.org/10.5539/ijef.v2n4p7

Mayer, C. J. and Somerville, C. T. (2000) 'Residential construction: using the urban growth model to estimate housing supply', Journal of Urban Economics 48, 85-109, http://dx.doi.org/10.1006/juec.1999.2158

McGarvey, M., and Meador, M. (1991) 'Mortgage credit availability, housing starts and the integration of mortgage and capital markets: new evidence using linear feedback', Journal of the American Real Estate and Urban Economics Association, 19, 25-40, http://dx.doi.org/10.1111/1540-6229.00538

MHUD (2007) Foreign investment in the housing sector of Iran, Ministry of Housing & Urban Development of Iran

Ng, S.T., Fan, R.Y.C. and Wong, J. M. W. (2011) 'An econometric model for forecasting private construction investment in Hong Kong', Construction Management and Economics, 29 (5), 519-534, http://dx.doi.org/10.1080/01446193.2011.570356

Rodriguez. C. and Bustillo, R. (2010) 'Modeling foreign real estate investment: The Spanish case', Journal of Real Estate Finance and Economics, 41 (3), 354-367, http://dx.doi.org/10.1007/s11146-008-9164-9

Tan, W. (1988) 'GNP, interest rate and construction investment: empirical evidence from US data', Construction Management and Economics, 6 (3), 185-193, http://dx.doi.org/10.1080/01446198800000017

Tang, J.C.S., Karasudhi, P. and Tachopiyagoon, P. (1990) 'Thai construction industry: demand and projection', Construction Management and Economics, 8 (3), 249-257, http://dx.doi.org/10.1080/01446199000000022

Thom, R. (1985) 'The relationship between housing starts and mortgage availability', The Review of Economics and Statistics, 67 (4), 693-696, http://dx.doi.org/10.2307/1924817

Topel, R. and Rosen, S. (1988) 'Housing investment in the United States', The Journal of Political Economy, 96 (4), 718-740, http://dx.doi.org/10.1086/261560

Tse, R. Y. C. and Ganesan, S. (1997) 'Causal relationship between construction flows and GDP: evidence from Hong Kong', Construction Management and Economics 15 (4), 371-376, http://dx.doi.org/10.1080/014461997372926

Wigren, R. and Wilhelmsson, M. (2007) 'Construction investments and economic growth in Western Europe', Journal of Policy Modeling, 29 (3), 439-451, http://dx.doi.org/10.1016/j.jpolmod.2006.10.001

Yiu, C.Y., Lu, X.H., Leung, M.Y. and Jin, W.X. (2004) 'A longitudinal analysis on the relationship between construction output and GDP in Hong Kong', Construction Management and Economics, 22 (4), 339-45, http://dx.doi.org/10.1080/0144619042000176465

Article Metrics

Metrics Loading ...

Metrics powered by PLOS ALM