| dc.description.abstract | This dissertation seeks to find the national economic factors that determine residential property prices in GKMA and the nature and direction of the effects. Residential property prices are represented by RPPI for this experimental survey. This index is available for each of the six areas in GKMA i.e., Nakawa, Wakiso, Kampala & Makindye and Rubaga & Kawempe as well as a headline index for the GKMA in general. The national economic variables used for this research include mortgages, core inflation, interest rates, GDP and exchange rates. All the variables run from FY 16/17 Q1 to FY 22/23 Q3 and as a result time series analysis is used. The nature of the relationship between the national economic factors and headline RPPI is tested using the ARDL model. To test the presence of a cointegrating relationship, the ARDL bounds test was also done which appropriated the use of the ARDL ECM to test for the nature of the long run and short run relationships. The null hypotheses were that each of the national economic variables had a negative relationship with the residential property prices in GKMA represented by headline RPPI and from the results of running the ARDL model, they were accepted for core inflation, interest rates, exchange rates, quarterly GDP and headline RPPI for the previous quarter with only quarterly mortgages leading us to reject the null hypothesis. However, only the relationships with core inflation and exchange rates after two quarters were found to be significant. On running the error correction model, a negative relationship was found with core inflation, exchange rates and quarterly GDP in the long run with only core inflation being significant. Quarterly mortgages and interest rates on the other hand were found to have a positive relationship. For the short run, only interest rates and exchange rates were found to have an effect on headline RPPI with the former being positive and the latter being negative. It must also be noted that a non-explosive, negative and significant error correction term was found which indicated that the variables return to their long-run equilibrium after a shock at a speed of -1.0628 after one quarter. Additionally, predictive models were separately
developed for each of the areas that make up GKMA so as to enable further analysis with the forecasts of the national economic variables using the Box-Jenkins ARIMA methodology. These were used to build up the headline RPPI and as such the forecasts are considered to be more accurate compared to when they are made directly from the headline RPPI. Some of the recommendations based on the results suggest that the central bank should adopt an expansionary monetary policy by decreasing interest rates only in the short run period since the long run, as per the results of the ECM, the decrease in interest rates eventually leads to an increase in headline RPPI. The text that follows provides greater detail for each of the components of this dissertation. | en_US |
