The Relationship Between Sri Lankan Economy and The Property Market

Abstract

This paper investigates the relationship between property market and national economy of Sri Lanka primarily based on time series analysis. However, the study has examined the same in global context through a comprehensive literature review. Construction was used as a proxy to represent the property sector due to non-availability of statistical data on property indicators. In finding the relationship, the growth rates of construction value added (CVA) and construction capital formation (CCF) were used to represent the property sector's performance while the growth rate of gross domestic product (GDP) was to represent the economic growth. The results show that the upturns and downturns in growth rates of both construction value added and construction capital formation follow a similar trend of GDP growth rate. Further, in Sri Lanka construction contributes around 7-9% to GDP during the last five decades except two extreme contributions of 11% and 6% in 1956 and 1965 respectively. DOI: http://dx.doi.org/10.4038/besl.v7i1.1949 Built-Environment Sri Lanka Vol.7(1) 2007 3-8