Dynamic interaction among house prices, population, urbanization and economic globalization in G7 countries

Summary:  View help for Summary The study examined the effect of different forces on property prices for G7 countries by incorporating the economic globalization in the model for the period 1991-2013. Moreover, the study utilizes the regression of group mean dynamic common correlated estimator (DCCE) to analyze the relation between long property prices (LPP), population (POP), urbanization (URB), and extended the model using KOF economic globalization measure as common effect contributor. By using the data set from world development indicators, Bank for International Settlements (BIS) and KOF globalization index, a number of models are investigated. Results of the study suggest that population, old property prices, and economic globalization are main determinants of current property prices for G7, while urbanization has a negative impact on house prices level in short run and positive significant impact in long run. Furthermore, results of DCCE show that while controlling the other factors, with 1% increase in population 1.13% property prices increases in the short run. Similarly increase in 1% level of urbanization will lead to increase 1.69% in property prices in long run and likewise, 1% increase in economic globalization will drive property prices up by 0.12% in long run. The policymakers can use these results to develop appropriate policies for the development of property markets and economic growth in G7 countries.