Determinants of house price volatility in Namibia

Purpose This paper aims to test the volatility and analyses the macroeconomic determinants of house price volatility in Namibia over the period 2007 Quarter 1 to 2017 Quarter 2. It further explores the causal relations between house price volatility and its determinants. Design/methodology/approach The study used autoregressive conditional heteroskedastic and generalized autoregressive conditional heteroskedastic models to test for volatility. The vector error correction model was used to analyse the determinants and causal relations. Findings The results support the hypothesis that house prices in Namibia exhibits persistent volatility. It was further established that past period volatility' GDP and mortgage loans are the key determinants of house price volatility. Additionally' there exists unidirectional causality from GDP and mortgage loans to house price volatility. Practical implications - Policy implications emanating from the study implies that macroeconomic fundamentals should be monitored closely to mitigate the issues of house price volatility. Originality/value The study is the first of its kind in Namibia to address the pertinent issues of ever increasing housing prices.