IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v10y2022i6p125-d827452.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/10/6/125/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7099/10/6/125/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Leung, Charles, 2004. "Macroeconomics and housing: a review of the literature," Journal of Housing Economics, Elsevier, vol. 13(4), pages 249-267, December.
    2. James D. Hamilton, 2018. "Why You Should Never Use the Hodrick-Prescott Filter," The Review of Economics and Statistics, MIT Press, vol. 100(5), pages 831-843, December.
    3. 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.
    4. Hong, Yun & Li, Yi, 2020. "Housing prices and investor sentiment dynamics: Evidence from China using a wavelet approach," Finance Research Letters, Elsevier, vol. 35(C).
    5. John D. Bone, 2009. "The Credit Crunch: Neo-Liberalism, Financialisation and the Gekkoisation of Society," Sociological Research Online, , vol. 14(2), pages 103-110, March.
    6. Gabriel Fauveaud, 2020. "The New Frontiers of Housing Financialization in Phnom Penh, Cambodia: The Condominium Boom and the Foreignization of Housing Markets in the Global South," Housing Policy Debate, Taylor & Francis Journals, vol. 30(4), pages 661-679, July.
    7. 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.
    8. Hurn, Stan & Shi, Shuping & Wang, Ben, 2022. "Housing networks and driving forces," Journal of Banking & Finance, Elsevier, vol. 134(C).
    9. Leung, Charles Ka Yui, 2022. "Housing and Macroeconomics," MPRA Paper 115500, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Leung, Charles Ka Yui, 2022. "Housing and Macroeconomics," MPRA Paper 115500, University Library of Munich, Germany.
    2. Al Refai, Hisham & Eissa, Mohamad Abdelaziz & Zeitun, Rami, 2021. "The dynamics of the relationship between real estate and stock markets in an energy-based economy: The case of Qatar," The Journal of Economic Asymmetries, Elsevier, vol. 23(C).
    3. Mark J Holmes & Jesús Otero & Theodore Panagiotidis, 2018. "Climbing the property ladder: An analysis of market integration in London property prices," Urban Studies, Urban Studies Journal Limited, vol. 55(12), pages 2660-2681, September.
    4. Pulapre Balakrishnan & M Parameswaran, 2019. "Modeling the Dynamics of Inflation in India," Working Papers 16, Ashoka University, Department of Economics.
    5. Hertrich Markus, 2019. "A Novel Housing Price Misalignment Indicator for Germany," German Economic Review, De Gruyter, vol. 20(4), pages 759-794, December.
    6. Owolabi, Adegboyega O. & Berdiev, Aziz N. & Saunoris, James W., 2022. "Is the shadow economy procyclical or countercyclical over the business cycle? International evidence," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 257-270.
    7. Chen, Pei-Fen & Chien, Mei-Se & Lee, Chien-Chiang, 2011. "Dynamic modeling of regional house price diffusion in Taiwan," Journal of Housing Economics, Elsevier, vol. 20(4), pages 315-332.
    8. Leung, Charles Ka Yui & Teo, Wing Leong, 2011. "Should the optimal portfolio be region-specific? A multi-region model with monetary policy and asset price co-movements," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 293-304, May.
    9. Francesco Simone Lucidi, 2019. "Real-time signals anticipating credit booms in Euro Area countries," Working Papers in Public Economics 189, Department of Economics and Law, Sapienza University of Roma.
    10. Ng, Joe Cho Yiu & Leung, Charles Ka Yui & Chan, Suikang, 2022. "Corporate Real Estate Holding and Stock Returns: International Evidence from Listed Companies," MPRA Paper 111691, University Library of Munich, Germany.
    11. Matthew Fisher-Post, 2020. "Factor Shares in the long run," World Inequality Lab Working Papers hal-02876978, HAL.
    12. Charles Ka Yui Leung & Joe Cho Yiu Ng & Edward Tang, 2020. "Why is the Hong Kong Housing Market Unaffordable? Some Stylized Facts and Estimations," Globalization Institute Working Papers 380, Federal Reserve Bank of Dallas.
    13. Leung, Charles Ka Yui & Ng, Joe Cho Yiu, 2018. "Macro Aspects of Housing," MPRA Paper 93512, University Library of Munich, Germany.
    14. Verbrugge, Randal & Zaman, Saeed, 2023. "The hard road to a soft landing: Evidence from a (modestly) nonlinear structural model," Energy Economics, Elsevier, vol. 123(C).
    15. Schüler, Yves S. & Hiebert, Paul P. & Peltonen, Tuomas A., 2020. "Financial cycles: Characterisation and real-time measurement," Journal of International Money and Finance, Elsevier, vol. 100(C).
    16. Yamaka, Woraphon & Zhang, Xuefeng & Maneejuk, Paravee & Ramos, Vicente, 2023. "Asymmetric effects of third-country exchange rate risk: A Markov switching approach," Annals of Tourism Research, Elsevier, vol. 103(C).
    17. Eiji Fujii, 2024. "Currency concentration in sovereign debt, exchange rate cyclicality, and volatility in consumption," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 160(1), pages 169-192, February.
    18. Constantino Hevia & Martín Sola & Ivan Petrella, 2022. "Bond risk premia, priced regime shifts, and macroeconomic fundamentals," Department of Economics Working Papers 2022_03, Universidad Torcuato Di Tella.
    19. Mark Setterfield & Joana David Avritzer, 2020. "Hysteresis in the normal rate of capacity utilization: A behavioral explanation," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 898-919, November.
    20. Gric, Zuzana & Ehrenbergerova, Dominika & Hodula, Martin, 2022. "The power of sentiment: Irrational beliefs of households and consumer loan dynamics," Journal of Financial Stability, Elsevier, vol. 59(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:10:y:2022:i:6:p:125-:d:827452. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.