Does economic policy uncertainty affect housing prices? Evidence from Asia-Pacific countries

Abstract

The present study utilises quarterly data from 1990 to 2022 to examine the relationship between household income, interest rates, and economic policy uncertainty (EPU) on housing prices in New Zealand, South Korea, Japan, Australia, China, and Singapore. The empirical analysis is carried out using the Autoregressive Distributed Lag (ARDL) bounds testing approach for cointegration. The results further indicate that economic policy uncertainty has both long-term and short-term positive effects on house prices. However, in New Zealand, economic policy uncertainty is found to harm house prices, while in Australia, it has a short-term negative impact on house prices. The findings offer compelling support for the significant influence of economic policy uncertainty on the dynamics of real estate markets across the Asia-Pacific region.