VOLATILE HOUSING PRICES, RESIDENTIAL INVESTMENTS AND THE BUSINESS CYCLES

Siwapong  Uruyos; Ahmad  Chaman; Nye  Wusin; Mario  Phichinni

Siwapong Uruyos Faculty of Economics, Chulalongkorn University, Phayathai Road, Bangkok
Ahmad Chaman Department of Development Studies, Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur
Nye Wusin School of Social Sciences, Universiti Sains Malaysia
Mario Phichinni Department of Economics, Bocconi University, Via Roberto Sarfatti, 25, 20100 Milano

Abstract

The housing markets have played an important role in driving macroeconomic fluctuations, especially during the recent financial crisis. Residential investment is a form of real estate investment that constitutes one of the world most valuable assets due to its durability. Housing investment is an important component of household wealth. There are a lot of factors that affect the demand and supply of housing investment. We investigate the correlation between housing dynamics and the business cycle for a variety of countries. Our empirical results exhibit the two daunting facts of the housing market, especially in the United States.