Open AccessHomeownership Rate and Other House Price Determinants Impacts on New House Prices in Colombia
Author(s) -
Héctor Alberto Botello Peñaloza
Publication year - 2020
Publication title -
journal for the advancement of developing economies
Language(s) - English
Resource type - Journals
ISSN - 2161-8216
DOI - 10.32873/unl.dc.jade913
Subject(s) - house price , real estate , leasehold estate , economics , investment (military) , panel data , government (linguistics) , per capita income , population , inflation (cosmology) , per capita , demographic economics , finance , monetary economics , econometrics , linguistics , philosophy , physics , demography , sociology , politics , theoretical physics , political science , law
Homeownership remains a preferred form of tenancy in different parts of the world. Theattractions of security, stability, investment potential and a sense of pride outweigh the fear ofprice instability. For this reason, the Colombian government has encouraged in recent years,various demand policies that have sought to promote the increase in the number of homeowners.However, these ideas could have a severe impact on prices in the real estate market. Therefore,this study seeks to examine the effect of homeownership rate on new house prices in an emergingcountry with low real estate ownership, credit restrictions and average per capita income. Thestudy uses panel data model to examine the influence of housing tenancy and other variables onthe variation of housing prices in Colombia. Data were obtained from various sources includingthe Central Bank of Colombia, Financial Superintendence of Colombia, and NationalAdministrative Department of Statistics of Colombia. The results show that homeownership rateshave a positive effect on the price of new homes, which supports the hypothesis of the research.The population growth of the cities is the factor that is most relevant when explaining the pricevariations.