Examining the presence of price bubble in the Iranian housing market using panel data
Subject Areas : Applied Economics
علی اکبر
خسروی‏ نژاد
1
(ندارد)
فرزانه
فتحی
2
(ندارد)
Keywords: Housing Market, bubbles, Panel data, co-integration,
Abstract :
In this paper, an attempt is made to test the hypothesis of existing a price bubble in the Iranian housing market during the years under the study, i.e. 2007-2008. Thus, the long run relationship between housing price and certain fundamental variables of the housing market has been investigated by utilizing the co-integration method of panel data using the data of different provinces. In this test , besides the housing price and rent, we have specified our model by including the population and household income as the main variables moving the demand for housing which and cost of production of housing and supply of new housing units as variables transferring the housing supply have been considered in order to reflect till to capture the shifting effects of demand and supply curves of housing which have been undergone the co-integration test. However , the results indicate that using the information related to the panel data of different provinces in the country, the long-run relationship between housing prices and fundamental variables in years under the review is valid and the hypothesis of existing the housing price bubble in these years is refuted. Hence, the rise or fall in the housing price in the years under the study can be deemed as severe fluctuations of prices in the housing market and not as bubbles