Determinants of House Price Dynamics and Household Indebtness Levels in Namibia - Research Writing - Economics Assignment Help

Assignment Task

INTRODUCTION
The housing market is widely regarded as an attractive market for investment for households and businesses. As such, house prices often appreciate over time making it a good investment for households. However, this asset appreciation can have negative consequences on household indebtedness levels. As a result, the wealth effect created by rising house prices can increase the ability of private households to borrow against their houses as collateral (Belke & Keil, 2017) . Moreover, in credit markets that are imperfect, the increased borrowing by households against house price increases can pose a considerable problem to the financial stability of the country. Accordingly, the correlation between house prices and household indebtedness has remained strong over time, and was especially strong during the credit crisis such as the 2007 global financial crisis.
Additionally, fluctuations in the prices of housing tend to amplify business cycles via the house price effect on total spending and financial systems (Kosgei, 2018) . Thus,
understanding the determinants and links between the housing market, debt, and consumption have received increasing attention in economic research and policy debates (Atalay, Barrett, Edwards, & Yu, 2020; Coskun, Seven, Ertugrul, & Alp., 2017; Emanuelsson, Katinic, & Spector, 2018; Sunde & Muzindutsi, 2017).

RESEARCH QUESTIONS
Some of the research questions to be answered by the study are as follows;
a) What impact do house prices and indebtedness levels have on the overall performance of the economy (GDP) in Namibia?

b) What are the main variables under this study that explain household indebtedness levels and causes for house price dynamics in Namibia?

RESEARCH HYPOTHESIS
The research hypotheses are as follows:

• H1a 0 : House Supply factors have no significant effect on House price
• H1a 1 : At least one supply side factor has a significant effect on House price
• H1b 0 : House Demand factors have no significant effect on House price
• H1b 1 : At least one demand-side factor has a significant effect on House price
• H2 0 : There is no causal relationship between supply side factors, house prices and household indebtedness
• H2 1 : There is at least one causal relationship between supply side factors, house price and household indebtedness
• H3 0 : There is no causal relationship between demand side factors, house prices and household Indebtedness
• H3 1 : There is at least one causal relationship between demand side factors, house price and household indebtedness.

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