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Is There Financialization of Housing Prices? Empirical Evidence from Santiago de Chile

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  • José-Francisco Vergara-Perucich

    (Centro Producción del Espacio, Universidad de Las Américas, Manuel Montt 948, Providencia 7500975, Chile)

Abstract

This paper empirically examines the influence of financial factors on housing prices in Chile, given the relevance that arises from the important housing crisis that the country is going through and the scarce amount of literature on causal relationships between price and other variables for the case under study. The hypothesis is that different financial factors have a significant influence on the price of housing, while the price of housing acts as an attractor of financial investment due to its good profitability. To conduct the statistical test, a Granger causality test is applied to a weekly data series covering the years 2009–2018. The results indicate that the causality hypothesis is plausible. On the one hand, the role of international stock market influences housing prices in Chile. Also, the Chilean Central Bank has a significant causality relationship with the housing prices. The structure of the article is organised with a second section devoted to explaining the methods and data used for the test, followed by the results analysed and discussed in the third section and closing conclusions that allow for further research and policy implications of the findings. These findings are valuable to complexify the Chilean housing policy by incorporating financial variables.

Suggested Citation

  • José-Francisco Vergara-Perucich, 2022. "Is There Financialization of Housing Prices? Empirical Evidence from Santiago de Chile," Economies, MDPI, vol. 10(6), pages 1-14, May.
    • Handle: RePEc:gam:jecomi:v:10:y:2022:i:6:p:125-:d:827452
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    References listed on IDEAS

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    3. Rodrigo Hidalgo Dattwyler & Luis Daniel Santana Rivas & Felipe Link, 2019. "New neoliberal public housing policies: between centrality discourse and peripheralization practices in Santiago, Chile," Housing Studies, Taylor & Francis Journals, vol. 34(3), pages 489-518, March.
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    5. Keith Jacobs & Tony Manzi, 2020. "Conceptualising ‘financialisation’: governance, organisational behaviour and social interaction in UK housing," International Journal of Housing Policy, Taylor & Francis Journals, vol. 20(2), pages 184-202, April.
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