Title: The impact of stock market and macroeconomic variables on real estate prices dynamics: evidence from Saudi Arabia

Authors: Mohammed S. Al Dohaiman

Addresses: Al Imam Mohammad Ibn Saud Islamic University (IMSIU), College of Administration and Finance, Saudi Electronic University, Saudi Arabia

Abstract: To enhance portfolio return and achieve diversification, Saudi investors have long been seeking opportunities in real estate markets since the crash of Saudi stock market on February 2006. The aim of this paper is to explain the determinants of real estate price dynamics in the case of Saudi Arabia. Using monthly data from January 2008 to December 2012, we examine the impact of key monetary policy and macroeconomic variables, including money supply growth, inflation rates and interest rate, on the real estate price growth dynamics in Saudi Arabia. We study also the effect of stock market conditions (return and conditional volatility) on explaining real estate price movement. This study has important implications for investment decision and real estate market analysis in the case of an important real estate market.

Keywords: real estate; monetary policy; stock market; quantile regression.

DOI: 10.1504/IJSRECE.2017.084354

International Journal of Sustainable Real Estate and Construction Economics, 2017 Vol.1 No.1, pp.3 - 15

Received: 23 Nov 2015
Accepted: 07 Mar 2016
Published online: 06 Jun 2017 *