The causal relationship between house prices and growth in the nine provinces of South Africa : evidence from panel Granger causality tests

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Authors

Chang, Tsangyao
Simo-Kengne, Beatrice Desiree
Gupta, Rangan

Journal Title

Journal ISSN

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Publisher

Inderscience

Abstract

This paper analyses the causal relationship between housing activity and growth in nine provinces of South Africa for the period 1995-2011, using panel causality analysis, which accounts for cross-section dependency and heterogeneity across provinces. Our empirical results support unidirectional causality running from housing activity to economic growth for most of the provinces studied; bi-directional causality between housing activity and economic growth for Gauteng; and no causality in any direction between housing activity to economic growth in Eastern Cape and KwaZulu-Natal. Our findings provide important insights for housing policies and strategies for South Africa. Specifically, housing sector might be an efficient growth-led instrument for all the provinces except Eastern Cape and KwaZulu-Natal.

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Keywords

House prices, Economic growth, Dependency and heterogeneity, Panel causality test, South Africa (SA)

Sustainable Development Goals

Citation

Chang, T, Simo-Kengne, BD & Gupta, R 2014, 'The causal relationship between house prices and growth in the nine provinces of South Africa : evidence from panel Granger causality tests', International Journal of Sustainable Economy, vol. 6, no. 4, pp. 345-358.