Urbanisation and housing finance nexus : evidence from Australia

M. Bangura, Chyi Lin Lee

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)

Abstract

The rapid urbanisation being experienced in major cities across the globe has occasioned greater housing demand and brought to the fore the importance of understanding housing finance systems to support the housing market. However, current literature on the nexus between urbanisation and housing finance is limited. Further, existing literature about housing finance is aggregated and assumed symmetric effects. We used a NARDL model to examine the asymmetric effects of housing variables on loan commitment over 1980Q2 to 2022Q2 and documented the following findings. First, we decoupled the housing finance market into owner-occupier and housing investment and found asymmetric effects of key housing variables on loan commitment for each of these submarkets. Second, urbanisation has a telling effect on loan commitment for owner-occupier but not for investors. Third, the asymmetric results highlighted the importance of promoting economic prosperity and reducing the housing lending rate to boost loan commitment for both owner-occupier and housing investment by varying magnitudes. However, increasing the approval rate of private dwellings and boosting the household savings ratio can enhance loan commitment for owner-occupiers but not investors. These findings could aid the formulation of more targeted housing finance policies, in turn, helping develop a more resilient housing market especially in countries with high urbanisation rates.
Original languageEnglish
Article number102897
Number of pages11
JournalHabitat International
Volume139
DOIs
Publication statusPublished - Sept 2023

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